NEW YORK (AP) — Oil prices dropped 10% and stock markets surged Friday following announcements from President Donald Trump and Iran’s foreign minister that the Strait of Hormuz had fully reopened to commercial shipping after nearly seven weeks of conflict.
Delaware drivers hoping for immediate relief at gas stations may need to wait longer than expected. Regular gasoline averaged $4.08 per gallon nationwide on Friday — 37% higher than before the U.S. and Israel launched attacks on Iran, though down slightly from the previous week.
Energy specialists warn that fuel costs typically decline much more slowly than crude oil prices, even with the critical waterway now accessible. Despite Iran maintaining passage through the strait while facing a U.S. naval blockade, gasoline prices may not return to pre-conflict levels until months after the February 28 start of hostilities.
Multiple factors contribute to sustained high fuel costs, including the slow pace of oil tanker transport to refineries, ongoing security worries, waterway congestion, and damaged energy facilities across the Middle East.
“The historical observation is that gasoline prices rise quickly but fall slowly, regardless of the particular causes of the increase,” explained Mark Barteau, a Texas A&M University chemical engineering professor.
Barteau elaborated on the complex process ahead: “In this case, one has to take into account the time it takes for the steps that have to happen once tankers sail through the straits – for example, sailing time to refineries on other continents, time to ramp up refinery operations, and time to transport some refined products by tanker to the continent where they will be used. There is also tendency to hedge bets because of doubts about whether and how quickly that restoration might occur, and whether further disruptions are possible along the way.”
Despite these challenges, some energy experts expressed cautious optimism about gradual price reductions.
AAA reported that fuel costs had already begun declining modestly following last week’s announcement of a temporary two-week ceasefire between the U.S. and Iran.
The dramatic $10 to $12 per barrel drop in oil prices following Friday’s strait reopening announcement typically translates to 25-30 cent reductions per gallon at the pump, according to Michael Lynch from the Energy Policy Research Foundation, a nonpartisan energy economics research organization.
“That doesn’t happen overnight, but within a week or two, we could be down 50 cents a gallon easily, if this holds,” Lynch predicted. “And part of it is, there’s a lot of tankers ready to go. And if they all come out, then that balances the market very quickly.”
Patrick De Haan, GasBuddy’s petroleum analysis chief, forecasted in a webcast that “every state will start seeing gas price decreases accelerate at a pace of probably 1 to 3 cents a gallon for every day or two. And that could continue for at least a couple of weeks.”
De Haan projected national regular gasoline averages could reach $3.45 to $3.65 by Memorial Day, while acknowledging the extended timeline for complete price normalization.
“It might take until later this year or early next year to really fully normalize and for some of these surcharges and impacts to reverse and disappear,” De Haan noted.
Syracuse University supply chain professor Patrick Penfield estimated that even with a comprehensive peace agreement, normal shipping through the Strait of Hormuz would require at least four months to restore.
“Right now, you still have potential mines that have to be removed or detonated, you have over 150 tankers that have been anchored in and around the strait, which is causing a traffic jam, and we still have shipping rates that are still high because of lack of shipping capacity and war rate insurance,” Penfield explained.
French and British leadership praised the strait’s reopening while emphasizing continued efforts to establish permanent navigation freedom through the narrow passage that typically handles one-fifth of global oil transport.
Lynch highlighted the trust deficit facing shipping companies: “Ship owners would have to be convinced to trust the Americans and Iranians, and that seems like it’s a hard hill to climb. I certainly wouldn’t want to do it. I wouldn’t wanna be the first ship through or even the first five ships through, but somebody will do it. There’s a lot of money on the table and somebody’s going to grab it.”
Regarding mine removal, Lynch suggested Iranian cooperation could expedite the process since Iran knows mine locations. However, he questioned the terms: “Now, that raises the issue, are the Iranians going to cooperate, or what do they want to cooperate? Are they going to demand a couple-million dollars a ship, as is talked about? Or is Trump going to say ‘that’s not acceptable,’ and then what’s the next step after that?”
Even with unrestricted strait access, oil-laden vessels face weeks of travel time to reach destinations due to their heavy, slow-moving nature.
Richard Joswick, S&P Global Energy’s global head of near-term oil analysis, emphasized the extended timeline: “People think that once the strait opens, it’s fine. We’re done. It’ll be better really fast. If you open the strait today to get a ship and bring it around and take it to Europe and run a refinery, turn it into products, you’re talking 10 weeks of a lag time here. It will be two to three months before things can start to get back to normal after the straight re-opens.”
Extensive damage to Middle Eastern oil infrastructure compounds delays, affecting refineries in Saudi Arabia and Kuwait, plus tanker terminals in the United Arab Emirates and Iran. While some repairs have occurred, significant damage persists.
Several nations reduced or suspended production during the conflict as blocked Strait of Hormuz shipping left vessels and storage facilities overwhelmed with stranded crude oil.
“It’s not a light switch. Everyone’s impatient and saying, ‘Go, go go,’” De Haan observed. “But it will take time to get these flows of oil through the Middle East fired back up again.”
Restarting oil wells presents additional challenges as shutdown periods can alter internal pressure, requiring time to restore flow. However, Lynch noted that some Middle Eastern fields can resume production rapidly.
“The Saudis have done that a bunch of times. They ramp up by 2 or 3 million barrels a day, almost overnight, and there’s no problem with the wells that have been shut in for months and sometimes years,” Lynch concluded.
