U.S. Gas Prices to Stay High Until at Least 2027 Despite Iran Peace Deal Hopes

Even if a U.S.-Iran peace deal materializes this time—still a significant uncertainty—consumers face a prolonged recovery before gas prices return to pre-war levels. Analysts suggest that pump prices will remain elevated, possibly far above pre-war levels, at least through the midterm elections.

U.S. retail gas prices are closely tied to global oil markets, which are expected to remain volatile for the foreseeable future. As of Wednesday, the average U.S. price for regular gasoline stood at $4.54 per gallon, compared to just under $3 per gallon before the war, according to AAA data.

Price Relief Could Arrive Within Days—But Full Recovery Will Take Years

Some relief may come quickly if the Strait of Hormuz reopens, according to Patrick De Haan, head of petroleum analysis at GasBuddy. However, the full recovery process will be gradual:

• Prices could drop by about one-third of the wartime increase within one to three months.
• The next third of the recovery may take three to six months.
• Prices may not return to pre-war levels until early to mid-2027.

"The next third might take 3-6 months, and we'd finally get back to pre-war prices I'd say right now in early/mid 2027," De Haan told Axios via email.

Why the Recovery Will Be Slow

The delay in price normalization stems from both global fuel logistics and domestic retail pricing dynamics. Restoring oil loadings and transit from the Middle East will require time, as will ramping up crude production that Persian Gulf producers reduced when export routes were disrupted.

"Even assuming a true and lasting end to the military conflict, it would still be several months before traffic through the Strait of Hormuz returns to its pre-war level," said Rob Smith, a top fuels analyst with S&P Global Energy.

Other analysts echo this timeline. Rystad Energy notes that a 30-day phased reopening of the Strait would be an "optimistic scenario," with "meaningful volume recovery" not expected until June at the earliest.

The "Rocket and Feathers" Effect: Why Prices Fall Slowly

Even when oil prices decline—such as this week amid progress toward a potential deal—gas stations often sell higher-cost inventory purchased when prices were elevated. This contributes to the "rocket and feathers" phenomenon, where retail fuel costs rise rapidly with oil prices but fall more slowly when crude prices drop.

Future Risks: What "Normal" Looks Like in the Strait of Hormuz

One major uncertainty is whether the Strait of Hormuz will ever return to its pre-war "normal." Gregory Brew of the Eurasia Group, in a Foreign Affairs essay, warns that Iran’s demonstrated ability to disrupt shipping lanes means future threats remain plausible.

"Having demonstrated it once, Iran can now credibly threaten to shut down the Strait of Hormuz in the future. Its military capabilities have been degraded but not destroyed. It would take little effort for Iran to deter shippers from resuming traffic," Brew writes.

He recommends that U.S. development finance agencies expand pipeline networks to bypass the Strait as a long-term solution.

Bottom Line: Prices Will Decline, But Not Soon

While some price relief is possible in the coming months, a full return to pre-war gas prices is unlikely before early 2027. Until then, consumers should brace for elevated fuel costs driven by geopolitical risks and lingering supply chain disruptions.