Gas prices won't return to pre-war levels any time soon

If a U.S.-Iran peace deal actually happens this time — and that's still a big if— consumers have a long road ahead before filling up returns all the way to the good old days of early 2026.

Why it matters: Even if the Strait of Hormuz opened right away, pump prices will likely remain higher — maybe a lot higher — than pre-war levels at least through the midterm elections.

• U.S. retail prices are tethered to global oil markets that will be in turmoil for a while.
• The average U.S. price for regular gasoline was $4.54 per gallon on Wednesday, compared to just under $3 pre-war, per AAA data.

What we're watching: Some price relief would come within days of the Strait of Hormuz truly reopening, per Patrick De Haan of the market data and analysis firm GasBuddy.

• But the rest of the recovery would take longer. He sees prices coming down by about a third of the wartime jump within one to three months.
• "The next third might take 3-6 months, and we'd finally get back to pre-war prices I'd say right now in early/mid 2027," De Haan, the firm's head of petroleum analysis, tells me via email.

Between the lines: The reasons it will take so long are rooted in both global fuel movements and the economics of retail pricing at home.

• Reviving oil loadings and transit from the Mideast will take time, and so will bringing back the crude production that Persian Gulf producers dialed down when export routes were cut off.

"Even assuming a true and lasting end to the military conflict, it would still be several months before traffic through the Strait of Hormuz returns to its pre-war level," Rob Smith, a top fuels analyst with S&P Global Energy, said via email.

• Other analysts agree. The consultancy Rystad Energy, in a note, argues that a 30-day phased reopening of the Strait would be an "optimistic scenario," and "meaningful volume recovery would happen in June at the earliest."

How it works: In the short term, even when oil prices fall — which they have already this week on news of progress toward a deal — gas stations are working through the higher cost inventory they bought when prices were higher.

• It's one of the reasons market-watchers point out the "rocket and feathers" dynamic — retail fuel costs shoot up when oil prices do, but can decline slowly even when crude falls sharply.

Threat level: One big unknown is what "normal" in the Strait of Hormuz will even mean in the future.

• Check out this new Foreign Affairs essay by Gregory Brew of the Eurasia Group, a political risk consultancy.
• "Having demonstrated it once, Iran can now credibly threaten to shut down the Strait of Hormuz in the future. Its military capabilities have been degraded but not destroyed. It would take little effort for Iran to deter shippers from resuming traffic," he writes.
• One of his recommendations is for U.S. development finance agencies supporting projects in the region to expand pipeline networks to bypass the Strait.

The bottom line: "U.S. gasoline prices would ... decline in the months following an end to the war but would be unlikely to return to pre-war levels before the end of the year," said Smith, the S&P analyst.