U.S. Gas Prices Fall Below $4 for First Time Since March After Trump Signs Iran Peace Agreement
President Trump signed a memorandum of understanding with Iran on June 17-18 to end their war and reopen the Strait of Hormuz, causing gas prices to plummet to $3.99 per gallon on June 18—the lowest price in three months and marking a major relief from the energy crisis that gripped the nation.
Agreement Brings Relief to Energy Markets
The average price of gas in the United States was $3.99 on Thursday, falling under $4 for the first time since March, after the U.S. and Iran signed an initial agreement to end the war in Iran. The memorandum of understanding signed by President Donald Trump and Iranian President Masoud Pezeshkian lays out terms to begin opening the Strait of Hormuz to commercial vessels and for the U.S. blockade of Iranian ports to be lifted.
Background on the Energy Crisis
The price decline marks a sharp reversal from months of turmoil. The U.S.-Iran war that began earlier this year had severely disrupted global oil markets, with the Strait of Hormuz—a critical chokepoint for petroleum exports—blocked by hostilities. Much of the world has been affected by panic buying and severe disruption to the distribution of petroleum products, liquefied natural gas (LNG), and urea used for fertiliser, with the economies of most countries expected to be adversely affected by the crisis, leading to inflation and heightened risks of stagflation and recession.
Timing and Diplomatic Breakthrough
Trump and Iranian President Masoud Pezeshkian signed the memorandum of understanding to end the war on 17 June, with Trump signing it during dinner with French President Emmanuel Macron at the Palace of Versailles following the G7 summit. On 18 June, primary mediator Pakistan announced that the US-Iran memorandum of understanding aimed at ending the war implies Tehran will promptly reopen the Hormuz Strait and that the American blockade of Iranian ports will cease immediately.
Market Reaction and Economic Impact
The rapid price decline reflects market confidence that oil flows will resume. The agreement comes after months of elevated prices that had contributed to inflation concerns ahead of the 2026 midterm elections. A new NPR/PBS News/Marist poll finds a record low share of Americans approve of President Trump's job performance and his handling of the economy heading into the summer before a key midterm election.
What Comes Next
Implementation of the agreement will be critical. Markets are watching for actual reopening of the Strait of Hormuz and whether Iranian oil begins flowing back into global markets at the pace promised in the memorandum. Full normalization of energy markets could take weeks, but the initial agreement has already provided substantial relief to consumers and investors.