Experts say gas prices will stay high for months even if Iran war ends

A gallon of gas in the United States costs an average of $4.12, a figure that stands about $1 higher than it did a year ago.

This price jump follows a period where the cost of fuel became a dominant factor in the recent midterm elections. The war in Iran disrupted global supply chains by restricting the flow of oil through the Strait of Hormuz. Before the conflict, roughly one fifth of the world's oil passed through that waterway. As the war throttled that route, the price of a barrel of Brent crude climbed from about $70 in late February to a peak near $110. It is currently hovering close to $95.

The rise in crude oil prices has pushed up the cost of refined products. According to AAA, diesel reached a record high of $6.52 per gallon in September. Although that number has dipped slightly, a gallon of diesel still costs about $2.50 more than it did at this time last year.

Major oil companies have posted substantial profits over the past two quarters as a result of these soaring prices. For drivers in Central Indiana and across the nation, the higher costs at the pump have made fuel expenses a primary concern. The recent election results saw Democrats gain control of Congress by wide margins, a shift that many voters attributed to frustration over the war and its economic impact.

However, energy experts caution that a change in congressional leadership will not immediately lower prices. The new Congress will not be sworn in until January. Until then, the White House retains the primary tools for influencing fuel costs. President Trump attempted to lower diesel prices by loosening rules on dyed diesel and by temporarily lifting sanctions to allow more Russian diesel into global markets. Neither of those actions resulted in a major price drop.

Once Democrats take their seats, they will have new leverage to pressure the president. Senate Minority Leader Chuck Schumer said on Wednesday that Democrats intend to end the war and reduce the cost of living. He told reporters that relief is on the way. Claudio Galimberti, chief economist at Rystad Energy, wrote that a unified Democratic Congress can make military escalation more costly. He noted that both chambers can pass resolutions, attach conditions to war spending, and hold back confirmations of key officials.

The president, however, maintains veto power and executive authority over military strikes and sanctions. Jorge León, head of geopolitical analysis at Rystad Energy, stated that the president retains full discretionary authority over blockades and licenses. Recent events have sent mixed signals about the direction of the war. On Nov. 2, the U.S. struck Qeshm, an island in the Strait of Hormuz, after warning Gulf Arab countries to prepare for a new campaign. Despite this, Vice President JD Vance posted on social media the day after the election that the reason the administration lost was the war.

If a deal to end the war is reached, the timeline for lower prices will be gradual. Jaime Brito, executive director of refining and oil markets for Dow Jones Energy, said that traders might see crude prices drop by $15 or $20 per barrel within two or three days of a formal announcement. For pump prices to fall, physical logistics must improve. Ships must return to their original routes through the strait, a process that could cause traffic jams. The oil then requires refining and distribution.

In the most optimistic scenario, Brito estimates it will take three months for gasoline and diesel prices to reach prewar levels. León believes it will take six months for crude to recover and an additional one or two months for retail fuel to follow. Both experts warn that hiccups in the process could stretch the recovery timeline to a year. If the war in Ukraine continues to disrupt Russian refinery output, diesel prices may stay elevated longer than gasoline. Additionally, high freight and insurance costs for shipping oil could keep Brent crude prices high. As Brito noted, expensive gasoline prices could become a new normal if the conflict does not end definitively.