Prices at gasoline pumps are beginning to sink and oil is on observe to drop 20% in May — its largest one-month decline since 2020 — as buyers stay optimistic that a deal to finish the Iran conflict is close to.
As of Friday, national average gasoline costs had eased to $4.39 a gallon, according to AAA. That’s about 17 cents decrease than the 2026 peak price of $4.56 a gallon – though it’s still practically 50% increased than pre-war costs.
Brent crude oil had fallen 1.3% to $91.51 a barrel as of about 2:50 p.m. ET Friday. The international benchmark was poised to fall about 20% from its 2026 peak.
As of Friday, national average gasoline costs eased to $4.39 a gallon, according to AAA. Anadolu via Getty Images
West Texas Intermediate crude dropped 1.9% to $87.19 Friday, and was also trying at a 19% month-to-month drop for the month.
The benchmarks plunged Thursday after the White House confirmed that US and Iranian negotiators have reached a potential settlement to reopen the Strait of Hormuz, a important maritime route for 20% of the world’s oil that has been largely blocked off for months.
Oil costs continued to fall Friday after President Trump posted on Truth Social that he would be assembly in the Situation Room “to make a final determination” on the deal.
Meanwhile, the S&P 500 and Nasdaq hit recent document highs this week – another signal that merchants are optimistic about a speedy finish to the conflict, even as the strait stays largely blocked off and oil executives sound the alarms over shrinking provides.
On Thursday, ExxonMobil senior vice president Neil Chapman issued a dire warning about international oil inventories – and the potential for $150 crude oil to become a actuality in just a few weeks.
“We’re approaching unheard-of inventory levels,” Chapman said at a convention hosted by Bernstein in New York.
The White House confirmed that US and Iranian negotiators have reached a potential settlement to reopen the Strait of Hormuz. REUTERS
“I mean really, really low levels,” he continued. “You can debate whether that’s going to hit, those really low levels, in two weeks or three weeks. Once you get to that point, then you’ll see price shoot up.”
He cautioned that oil costs could leap above $150 a barrel – which would translate to $9 gasoline in California, “and that will be a serious issue.”
Chevron CEO Mike Wirth said Friday power inventories have been tightening, even as demand stays robust, and that it could take many weeks for costs to normalize.
Asked on Bloomberg TV why those dangers haven’t been exhibiting up in the kind of $200-a-barrel oil, Wirth argued there’s a perception “that the end is near, the conflict is nearly resolved and flow through the strait will resume very quickly.”
But “it’s going to take months … to make sure that the mines have been cleared, to get 2,000 ships out” of the strait, Wirth said. “They don’t all go out at once. You need weeks and weeks.”
There have been new attacks on ships this week, “so we see risks very real, still, in that environment,” he added.
Average gasoline costs are still practically 50% increased than pre-war costs. REUTERS
Another cause markets could be keen to look previous provide disruptions is that US stockpiles are cushioning some of the blow – for the time being.
“The drop in oil inventories has come disproportionately from the Strategic Petroleum Reserve,” Jeff Krimmel, founder of Krimmel Strategy Group, advised The Post.
Commercial inventories are down about 25 million barrels so far this yr, while the reserve is 40 million barrels decrease, according to the US Energy Information Administration.
“Because the commercial inventory cushion is still strong, markets aren’t worried about lack of supply here in the US,” Krimmel said.
“Of course if flows through the Strait of Hormuz don’t reopen soon, then the international call on US crude will continue to grow, and we could find ourselves in an inventory squeeze that would affect prices.”
Analysts have said it could take six to eight weeks for oil costs to stabilize once the conflict ends, since it will take time to discover obtainable vessels to traverse the strait. Damages to Middle Eastern power amenities could also lengthen the disruption.
Treasury Secretary Scott Bessent has said that oil and gasoline costs will fall dramatically once the battle is over.
