MW Gas prices matter for households. But here's why they still look too low for Trump to give in to Iran right now.
By Myra P. Saefong
High as they are, the current prices for gas in the U.S. aren't as bad as some had anticipated.
President Donald Trump doesn't seem to be bending despite signs that U.S. oil and fuel prices could stay higher for longer than expected. It's quite the opposite - he's suggested that disruptions in the Strait of Hormuz haven't lifted oil prices nearly as much as he thought they would.
Yet with the summer travel season set to start in May and the U.S. midterm elections coming in November, pressure will be mounting on the White House to find a way to reopen the strait. That may lead to another TACO - a reference to "Trump Always Chickens Out" - on Iran. But it doesn't look like a close call right now.
Trump this week said during a CNBC interview that he was surprised by oil prices that were closer to $90 a barrel, as opposed to $200, since the U.S. "took this little journey," referring to the Iran war.
The strength in equity markets, despite the war, also seem to be emboldening Trump, who pointed out the Dow Jones Industrial Average's DJIA record climb in recent months to above 50,000 and the S&P 500's SPX jump above 7,000.
"The numbers are what they were when we started this whole thing," Trump said. "I thought they'd be down 20%." The S&P 500 touched an intraday record high on Thursday, but closed lower.
When asked Thursday if Americans should anticipate spending more on gasoline for the foreseeable future, Trump told reporters at an event related to prescription drugs: "For a little while."
Global crude prices have come off their March peaks of more than $107 a barrel, but are still up more than 40% since Feb. 27, the day before the war started, according to FactSet data. On Thursday, front-month global benchmark Brent crude (BRNM26) ended at $105.07. U.S. benchmark West Texas Intermediate crude (CL.1) (CLM26) settled at $95.85 on Thursday, also up more than 40% since the start of the war.
Trump's words during the Persian Gulf conflict have impacted the price of oil, as this chart on X from Rory Johnston, founder of oil-market research provider Commodity Context, shows.
"Frequent and strongly worded verbal interventions by the White House have unnerved futures-market participants," said Johnston in a Thursday Substack newsletter. "Short-term downside is acute when another Trump post can, and will, sink the intraday price of crude by $10-$15" a barrel.
To some extent, the current average near $4 a gallon for gas at the pump isn't as bad as some anticipated.
"Markets 'moved on' from the war and oil prices when gas prices stopped going up," Esther Sholes, senior macro analyst at Take Profit Trader, and former portfolio manager at Millennium Investment Management, told MarketWatch. If gas prices already peaked during this conflict, then so have the risks to inflation and growth from higher gas prices, she said.
Gas at $4 a gallon gas isn't likely to trigger any significant decline in consumer demand, according to Patrick De Haan, head of petroleum analysis at GasBuddy. He estimates that Americans are currently spending around 3.5% of their median income on gasoline so far, "a relatively small percentage." That doesn't "pinch" as much as $5- or $6-a-gallon prices, he said.
Drivers also might remember higher inflation and more expensive gas in 2022, the year Russia invaded Ukraine. With the current backdrop, it's "hard to see any event creating a big breakthrough" in the U.S.-Iran standoff, said Tom Kloza, senior energy adviser at Gulf Oil.
Trump already brought oil and gas prices "down to multi-year lows at record speed, and as traffic in the Strait of Hormuz normalizes, these energy prices will plummet once again," said White House spokeswoman Taylor Rogers. In January, average gas prices dipped under $2.80 a gallon, which was the lowest since at least 2021, according to GasBuddy data.
It would be pretty rare to see $4-a-gallon retail average prices into the summer driving season, said De Haan. That hasn't happened since 2022. And the U.S. may see more people hitting the road because they don't want to fly this summer, he said.
Read: Flight cuts are spreading as fuel costs surge - and higher summer fares look likely
De Haan said gas prices still hinge on the Strait of Hormuz. He thinks gas could sink to $3 a gallon on a quick resolution, or push close to $6 a gallon this summer without a clear agreement and free passage.
The current standoff at the crucial waterway has starved the market of roughly 10 million barrels of oil per day, according to Manish Raj, managing director at Velandera Energy Partners.
Hormuz remains in a "stalemate since each side wants to look victorious and neither is willing to compromise," said Raj. He instead thinks the run-up to the U.S. midterm elections will be crucial. "U.S. citizens have a long history of voting with their wallets in mind."
Rob Schroeder and Joy Wiltermuth contributed.
-Myra P. Saefong
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 24, 2026 07:30 ET (11:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments