US-Iran talks are heating up again. But the danger isn’t over for gas prices
By Matt Egan, CNN
New York (CNN) — Markets are breathing a sigh of relief that the shaky US-Iran ceasefire survived the long weekend and progress is being made on a potential deal to end the war.
US stocks are flirting with all-time highs and oil futures have backed away from $100 a barrel.
And yet it’s too early to sound the all-clear in this history-making energy crisis. Some analysts warn $5 gas is still a real danger this summer.
First, mere talk of a vague deal on social media is not nearly enough for investors.
The market must see that an actual agreement has been reached where both sides agree not just to end the war but to reopen the Strait of Hormuz, the critical waterway that Iran has used to hold the world economy hostage.
“Nothing has fundamentally changed. The strait remains closed,” said Rory Johnston, an oil market researcher and founder of Commodity Context.
Johnston stressed that Tehran is reluctant to reopen the strait because it remains Iran’s primary point of leverage.
“As soon as they open that spigot, they rapidly lose bargaining power,” he said.
‘I’ll believe it when I see it’
Secondly, the market wants proof that the Strait of Hormuz is truly reopening, ideally without tolls or fees that inflate the already-high cost of oil.
To solve the supply shock, the flow of tankers through the Strait of Hormuz needs to return toward pre-war levels.
“I’m skeptical. I’ll believe it when I see it,” Bob McNally, founder and president of Rapidan Energy Group, told CNN in a phone interview.
Some major players in the Gulf are skeptical, too.
Sultan Al Jaber, the CEO of ADNOC, the state oil company of Abu Dhabi, said last week that even if the conflict ended immediately it will take at least four months to get back to just 80% of pre-conflict flows through the strait.
Fully recovering to pre-war flows is unlikely until the first half of 2027, the ADNOC CEO said.
There’s also uncertainty about whether the ceasefire will even hold.
Brent crude oil futures jumped 4% on Tuesday, giving back a chunk of Monday’s major selloff, as tensions remain high in the Gulf. US forces conducted “self-defense strikes” targeting Iranian missile launch sites and boats around the Strait of Hormuz.
Notably, US officials said the strikes were aimed at boats attempting to place mines, a reminder of both the fragile nature of the ceasefire and the dangers facing vessels attempting to transit the waterway.
The ‘brutal’ math problem
Even in a best-case scenario where the ceasefire holds, a deal is reached and the strait reopens, serious damage to the world energy system has already been done.
More than 1.2 billion barrels of oil have been derailed by the war, according to S&P Global Energy. And that tally rises each day the Strait of Hormuz remains largely closed.
Not only is supply down, but energy demand is rising because summer driving season has started.
“Even in the best case, a fundamental tightening of the market is baked in the cake. There is this brutal, inexorable math that can’t be changed by a deal,” McNally said. “I don’t want to be a Debbie Downer, but we don’t believe we’re done.”
McNally still expects Brent crude oil futures will return to $120 or even $130 a barrel and US gas prices to flirt with the all-time high of $5.02 a gallon set in June 2022.
Gas prices have leveled out in recent weeks around $4.50 a gallon, compared with $2.98 when the war started.
Johnston said that if the Strait of Hormuz remains closed for the next month, gas prices will very likely break those Biden-era record highs.
“If it ends today, it’s a trickier question,” Johnston said. “We will get an immediate relief selloff but it will still take months to normalize flows out of the strait. We could sell off and then grind higher to all-time highs as everyone gets back to the math.”
$100 oil even after a deal?
Oil industry insiders agree that pre-war energy prices are not returning anytime soon – unless the economy implodes.
JPMorgan expects that even after the Strait of Hormuz reopens, Brent crude will average $104 a barrel in the third quarter and $98 in the fourth quarter of this year.
Kevin Book, managing director of ClearView Energy Partners, said that within weeks or months of a deal, the strait can be de-mined, ships stuck in the Persian Gulf can be evacuated, new ships can enter and oil production can get restarted.
However, he cautioned it will likely take longer, many months or even years, to repair damaged facilities, fully restore production and restock shrinking inventories.
“I don’t think anybody is expecting to return to averaging $60-a-barrel oil anytime soon,” Book told CNN. “It will take a while for supply to come back on stream.”
The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
