For the first time in months, American drivers have a reason to look at the gas pump with something other than dread. The US-Iran ceasefire announced late Tuesday night sent oil prices tumbling more than 16% on Wednesday — and analysts say the relief could reach the pump within days.

The national average for a gallon of regular gasoline stood at $4.14 on Wednesday, according to AAA data — nearly $1 higher than it was a year ago. It could fall below $4 within one or two weeks, according to Patrick De Haan, head of petroleum analysis at GasBuddy, who posted the projection on X Tuesday evening shortly after the ceasefire was announced. That kind of movement, while not guaranteed, would represent meaningful financial relief for tens of millions of American households heading into the spring travel season.

What Happened in the Oil Market

The immediate market reaction to the ceasefire was sharp. West Texas Intermediate, the US crude benchmark, tumbled 18% to $92 a barrel — a sharp drop, though still well above the $67 level it settled at on February 27, before the war began. Brent crude, the global benchmark, dropped nearly 17% to $91 a barrel. US stocks opened sharply higher: the Dow soared 1,374 points, the S&P 500 gained 2.56%, and the Nasdaq Composite rose 3.46%.

The ceasefire’s central energy provision was Iran’s agreement to allow passage through the Strait of Hormuz — the narrow waterway between Iran, Oman, and the United Arab Emirates through which roughly 20% of the world’s oil normally flows. The conflict had effectively closed that channel for weeks, stranding oil supplies and driving prices to levels that rattled consumers and businesses alike.

Diesel prices “may lag slightly,” De Haan said, but he added that diesel is no longer likely to reach a record. The average diesel price stood at $5.646 on Tuesday, edging close to the all-time high of $5.816 set in 2022. That is welcome news for trucking companies, shipping operators, and any business that depends on freight — a category that touches nearly every product Americans buy.

Why Gas Prices Don’t Fall as Fast as Oil

One of the most reliable frustrations in American economic life is that gas prices rise quickly when oil prices spike, but fall slowly when oil retreats. This dynamic has a name in economics — the “rockets and feathers” effect — and it is already at work.

The gasoline being purchased today at the pump was actually refined anywhere between two to four weeks ago, according to Rey Trevino III, vice president of operations for Pecos Country Energy in Fort Worth, Texas. “So everybody has to get their cut of that price two to four weeks ago in the price of gasoline today,” he said. If everything were to stabilize now, prices would probably change at the pump in about six to eight weeks.

Raymond James investment strategy analyst Pavel Molchanov echoed that timeline, saying retail gas prices “tend to be more sticky on the way down.” The drop in oil prices “should single-handedly shave off $0.45/gallon, implying the national average pulling back to around $3.70. We expect that to take at least two weeks,” he said.

Mark Zandi, chief economist at Moody’s Analytics, predicts that if oil prices stabilize at around $90 per barrel, gas will continue to retreat and settle around $3.75 a gallon. Global oil prices have already fallen below $95 a barrel on Wednesday. “Prices go up like a rocket, and they come down like a feather,” Zandi told CBS News. “I don’t think there is any going back to sub-$3 a gallon for a while.”

The Strait of Hormuz: Why the Numbers Are Still Uncertain

The reason analysts hedge their forecasts is that the ceasefire’s durability is genuinely uncertain — and the mechanics of restarting global oil shipping are more complicated than flipping a switch.

A major thing to watch following the ceasefire is whether it gives tanker owners enough certainty to begin large-scale resumption of traffic of oil, petroleum products, and other commodities through the Strait of Hormuz. “Confidence-building measures in coming days are going to be key to restoring shipments,” said Joe Brusuelas, chief economist at RSM US. Insurance for tankers will need to be reestablished, and that means figuring out the specific conditions Iran may impose, which remain murky right now.

As of Tuesday, 187 tankers laden with 172 million barrels of seaborne crude and refined oil products remained inside the Gulf, according to global trade intelligence firm Kpler. That backlog won’t clear overnight, with potential lasting consequences for energy markets. Early signs of transit were emerging — a Greek-owned bulk carrier and a Liberia-flagged vessel had transited the strait early Wednesday, according to ship-tracking platform MarineTraffic — but the volume remained far below normal.

Brusuelas predicts it will take three to six months to fully reach pre-war levels of regional production and refining. On the natural gas side, damage to liquefied natural gas exporting infrastructure in Qatar may take years to fully repair.

What It Means for American Drivers

The math of relief is straightforward even if the timeline remains uncertain. The national average price of gasoline was slightly below $3 per gallon when the military operation against Iran began on February 28. The supply squeeze caused oil prices to spike. Gas prices tend to fall more slowly than they rise when supply shocks occur, as businesses within the supply chain protect against losses or factor in future costs due to another possible disruption.

For drivers, the near-term scenario looks like gradual improvement rather than a sharp reversal. Gas prices could start reversing nationally within 48 hours or so — by a few cents every day. This would bring the national average to under $4 a gallon within a week or two, according to De Haan. But the trajectory depends on whether the ceasefire holds and how quickly tanker traffic through the strait normalizes.

Any sustained decline would also ease pressure on the broader consumer economy. Higher fuel prices ripple through the cost of nearly everything transported by road — groceries, goods, construction materials. A return toward $3.75 per gallon nationally, even if it takes several weeks, would reverse a meaningful share of the inflationary pressure that the conflict generated since late February.

Markets will now look for something more durable than a two-week pause, according to Geoff Yu, senior market strategist at BNY. “What the market is going to start pricing ahead is a first step towards further de-escalation and perhaps something more permanent,” he said.

For now, the signal at the pump is cautiously positive — and for millions of Americans who have been watching the numbers climb all spring, that is a start.