Oil prices fall on Iran deal hopes, but US gas stays above $4.50

Global oil markets showed signs of easing after reports that the United States and Iran may be close to a deal to end the ongoing conflict and reopen the Strait of Hormuz, a critical route for global energy supplies.

Crude prices dropped sharply, with benchmark oil falling between 7% and 10% in a single session as markets reacted to the possibility of improved supply flows.

The reported agreement could include steps such as limiting Iran’s nuclear activity, easing sanctions, and reopening the Strait of Hormuz to tanker traffic. The waterway handles roughly one-fifth of global oil shipments, making it central to global energy stability.

Any reopening of the strait would help restore disrupted supply chains that have been under strain since the conflict escalated earlier this year.

Despite the drop in crude prices, US gasoline prices remain elevated, crossing $4.50 per gallon—the highest level in nearly four years.

The surge has been driven largely by the disruption of oil shipments through the Strait of Hormuz during the conflict, which tightened global supply and pushed up fuel costs.

In several states, prices have climbed even higher, with some regions seeing rates above $6 per gallon.

Even if a deal is finalised, analysts say oil markets may not stabilise immediately. Restarting shipping routes, restoring tanker flows, and rebuilding market confidence could take several weeks.

This means that while oil futures may react quickly to diplomatic developments, actual fuel prices for consumers could take longer to ease.

The ongoing conflict has been a major driver of volatility in global energy markets. Since it began earlier this year, oil prices have surged above $100 per barrel at times, reflecting concerns over supply disruptions and geopolitical risk.

The Strait of Hormuz has remained a key flashpoint, with restrictions on shipping significantly affecting global oil flows.

For now, markets remain highly sensitive to developments in US–Iran negotiations. A confirmed agreement could ease supply concerns and bring prices down further, but uncertainty around implementation and logistics continues to weigh on the outlook.

Even with positive signals, energy markets are expected to remain volatile in the near term, with fuel prices likely to reflect both geopolitical risks and supply constraints.