Gas prices face $15 to $20 drop if Iran war ends, experts say

Drivers paying $4.12 for a gallon of gas and roughly $2.50 more for diesel than a year ago will not see immediate price cuts from the new Democratic-controlled Congress. The midterm victory was driven by voter anger over fuel costs, which surged after the war in Iran restricted the Strait of Hormuz, a waterway that previously carried about one-fifth of global oil.

Brent crude oil prices spiked from approximately $70 in late February to around $110, settling near $95 currently. This increase pushed the average national gas price up by about $1 and drove diesel to a record high of $6.52 in September. While diesel prices have dipped slightly since that peak, they remain significantly elevated compared to last year, according to AAA data.

The new Congress cannot act immediately because members are not sworn in until January. Once seated, legislators will have limited direct power over global oil prices, which are determined by complex international markets. Previous attempts by the White House to lower costs, such as loosening rules on dyed diesel and temporarily lifting sanctions on Russian diesel, failed to move prices substantially.

Democrats can influence the conflict by making it harder for the president to authorize new war spending. Senate Minority Leader Chuck Schumer told reporters on Wednesday that Democrats intend to end the war to lower the cost of living. Claudio Galimberti, chief economist at Rystad Energy, noted that a unified Democratic Congress can attach conditions to spending and hold back confirmations of key officials to make escalation more costly.

President Trump retains veto power and executive authority over military strikes and sanctions. He sent mixed signals recently, warning Gulf Arab nations of a new campaign after the midterms while striking Qeshm island in the Strait of Hormuz on Nov. 2. On election night, Trump told The New York Times he understood voter unhappiness about gas prices. Vice President JD Vance posted on social media the next day that the war was the reason for the electoral loss.

If a peace deal is announced, crude prices could drop $15 to $20 per barrel within two to three days, according to Jaime Brito of Dow Jones Energy. However, gasoline and diesel prices will lag behind. Ships must return to their original routes, and refineries must process the new supply. Brito estimates it could take three months for pump prices to return to prewar levels in the best-case scenario. Jorge León of Rystad Energy suggests a timeline of six months for crude and an additional one to two months for refined products.

Several variables could extend this timeline to a year. Attacks on Russian refineries in Ukraine may keep diesel prices high, as Russia supplies much of the world's diesel. U.S. refineries are operating above 90% capacity, leaving little room for emergency maintenance. Freight and insurance costs have also risen due to longer shipping routes and higher risk, keeping Brent crude elevated even if the strait reopens.