Brent crude oil slipped below the $100 per barrel mark on Thursday, as the United States and Iran edged closer to a tentative agreement to pause their ongoing conflict. This development eases some pressure on President Donald Trump, but American drivers are still grappling with gasoline prices hovering near multi-year highs. According to Reuters, the proposed draft accord aims to halt hostilities, secure shipping routes through the Strait of Hormuz, and create a 30-day window for broader negotiations, while leaving key nuclear issues unresolved.
The relief has yet to reach the pump. The U.S. average for regular gasoline climbed to $4.558 per gallon on May 7, according to AAA, up from $4.536 the previous day and $4.300 a week earlier. Diesel prices are even higher, at $5.674 per gallon. This comes just as the summer driving season approaches, adding strain to household finances and looming large ahead of the midterm elections.
Bank of America economist Stephen Juneau warned in a note on Wednesday that consumers should not expect "meaningful relief for a while," with gasoline prices likely to hover near $4 all summer. The policy debate has centered on what some analysts call Trump's "nuclear option"—imposing restrictions on U.S. oil exports to retain more supply domestically. However, Interior Secretary Doug Burgum and Energy Secretary Chris Wright indicated that the White House is not seriously considering such measures, according to CNN and The Independent.
While boosting domestic supply could theoretically lower gasoline prices quickly, RBN Energy's Robert Auers cautioned that any relief at the pump might vanish in under a year. Macquarie's Vikas Dwivedi highlighted the risk of triggering a global recession, and Rapidan Energy Group's Bob McNally argued that export restrictions could undermine the U.S. reputation as a reliable energy supplier. The situation is complicated by the fact that U.S. refineries are largely configured for heavier imported crude, with only about 60% of refinery inputs coming from domestic production, as noted by the Associated Press.
Brent crude slid 2.5% to $98.77 a barrel as of 1107 GMT Thursday, while U.S. West Texas Intermediate fell 2.6% to $92.61. "Between diplomacy and disruption—that's where oil markets have lingered for over two months," said Priyanka Sachdeva, senior market analyst at Phillip Nova. The market remains tight: U.S. crude inventories dropped by 2.3 million barrels for the week ended May 1, according to the Energy Information Administration. Gasoline stocks fell by 2.5 million barrels, and distillate supplies—covering diesel and heating oil—sank to levels last seen in 2005. Andy Lipow of Lipow Oil Associates attributed the tightness to exports, as the U.S. has been sending fuel abroad to cover shortages caused by Middle East turmoil.
Even if a deal is reached, oil flows will not bounce back instantly. Paola Rodriguez-Masiu, Rystad Energy's chief oil analyst, pointed to a six-to-eight-week lag between reliable access through the Strait of Hormuz and normalized volumes. Conversely, Raymond James analyst Pavel Molchanov suggested that even a partial agreement could start easing shipping bottlenecks and bring some relief at U.S. gas stations in as little as one to two weeks. Traders remain on edge, as Iran dismissed the U.S. offer as an "American wishlist" and Trump threatened to restart bombing if Tehran rejects the terms. French shipper CMA CGM reported that one of its vessels came under attack in the Strait of Hormuz, underscoring the market's sensitivity to headlines.
Oil giants are back in focus, with Trump sitting down this week with Chevron and ExxonMobil officials about Venezuela as another lever to increase supply. Reuters columnist Ron Bousso added that export restrictions might hit refiners' margins, pushing plants to cut rates and deepening shortages both domestically and abroad. Clean energy's impact will take years to materialize at the pump; the EIA projects solar's share of U.S. electricity generation will climb to 8% by 2026 from 5% in 2024. However, gasoline prices depend largely on crude oil, which accounted for about 51% of the 2025 retail price of regular gasoline.
