Gas prices poised to fall after oil’s 16% plunge, but relief won’t be immediate

The cost of a gallon of gas could fall 1 to 3 cents per day by the weekend, as oil prices plunged on news of a U.S.-Iran ceasefire, though immediate relief at the pump remains unlikely. Unleaded gas prices had risen more than $1.20 per gallon since the war began, climbing from $2.94 to $4.16 as of Wednesday morning, according to GasBuddy data. While wholesale oil markets reacted swiftly—U.S. crude dropped 16.4% to $94.41 per barrel, its largest one-day decline since 2020—retail gasoline prices take longer to adjust.

GasBuddy analyst Patrick De Haan noted that “these big drops today don’t get locked in until this evening,” with broader declines expected within 36 hours. The lag stems from supply chains, regional refining margins, and station-level pricing inertia. Even as international Brent crude fell 13.3% to $94.75, the physical flow of refined fuel and distributor pricing decisions delay the transmission to consumers.

The ceasefire announced by President Donald Trump has not fully resolved shipping risks in the Strait of Hormuz. Despite claims of safe passage, maritime insurance markets—centered at Lloyd’s of London—remain hesitant. “It is highly unlikely that trade into the Gulf will simply resume,” said Neil Roberts of the Lloyd’s Market Association, citing unresolved regional tensions. Without insured shipping, crude supply stability remains fragile, tempering how far and how fast prices may fall.

Meanwhile, the broader energy shock continues to ripple through industries. Delta Air Lines expects to spend $2 billion more on jet fuel this quarter, forcing it to cut growth plans. Exxon Mobil reported a 6% loss in global output after attacks damaged liquefied natural gas facilities, with repairs expected to take months. Even as oil prices retreat, the underlying damage to infrastructure and persistent geopolitical risk mean any relief is provisional.

The Federal Reserve’s recently released meeting minutes underscored the economic stakes, warning that prolonged conflict could reduce household purchasing power through higher energy costs—potentially warranting future rate cuts. For now, the dip in oil has already influenced financial markets: the 10-year Treasury yield fell to 4.2%, pushing the average 30-year mortgage rate down to 6.38%. But for drivers, the path back to cheaper gas depends not just on peace talks, but on insurers, refiners, and shippers recalibrating risk—one gallon at a time.