Oil prices dropped sharply after news emerged of a US-Iran agreement to reopen the Strait of Hormuz, a critical waterway handling roughly a quarter of global seaborne oil shipments. The deal follows months of disruption after US and Israeli strikes on Iran in February effectively closed the strait, triggering one of the deepest supply shocks in recent memory.

Traders see the agreement as potentially ending the supply crunch, but drivers shouldn't expect immediate relief at the pump. Analysts say crude prices must decline further before gasoline reaches $3 a gallon nationally, and stockpiles need time to rebuild.

Refineries and storage facilities depleted their inventories during the crisis, creating a lag between crude price movements and retail fuel costs. The market dynamics suggest that even with normalized shipping through the strait, supply chain rebuilding takes time.

Consumers likely face another year of elevated prices before pre-crisis levels return, with analysts pointing to late 2026 as the earliest realistic timeline for meaningful relief at American gas stations.