A sign displaying the price of regular gasoline and diesel fuel at a Citgo gas station in Brewer, Maine on June 8. (Graeme Sloan/Bloomberg)
key takeaways:
- A temporary US-Iran agreement to reopen the Strait of Hormuz has begun to ease oil prices, but consumers are unlikely to see immediate price declines.
- Disruptions to oil, shipping and fertilizer supply chains pushed up the cost of fuel, food and commodities, and analysts say the pressure could last for months.
- Experts say relief will come slowly as cheap energy works through reserves, with higher grocery prices, shipping costs and airfares expected to persist into 2026 and beyond.
NEW YORK – A tentative agreement to end the Iran war makes it fair to ask how quickly the prices of gasoline, groceries, airline tickets and other commodities that have become more expensive during the conflict will fall.
Experts say not so fast.
Even after oil starts flowing from the Middle East again, it may take some time for consumers to see a difference at local fuel pumps, supermarkets and other places they shop, according to economists and industry analysts.
The fighting over the Strait of Hormuz disrupted not only the supply of crude and refined fuel, but also the supply chains of fertilizer, food and even shoes. Businesses expect higher costs to persist, which means their customers may need to prepare for this as well.
“Despite three months of war, it is not clear that anything has been accomplished that makes the American consumer better off,” said Brett House, an economist who teaches at Columbia Business School. “Indeed, by almost any measure, not only American consumers, but the world, is worse off as a result of this attack.”
Here’s how experts see whether the effects of the war will subside in the coming weeks, if the deal between the US and Iran remains in place:
some gas relief
Following news of the tentative agreement, oil prices fell to around $80 per barrel of US benchmark crude on June 15. This compares with $67 per barrel before the war and prices reaching more than $120 per barrel during the conflict.
Refineries typically pay for crude oil a month or more in advance, so even after oil prices fall, they will not immediately be processing cheaper products.
“The gradual downward trend in gasoline prices is partly because it takes weeks for crude to work through the system until it reaches consumers,” said Michael Lynch, a distinguished fellow at the nonpartisan Energy Policy Research Foundation.
In places that don’t have enough refining capacity to meet their needs, such as the U.S. West Coast, it will take longer for gas prices to come down, said Mark Barto, a professor of chemical engineering and chemistry at Texas A&M University.
In some Asian and African countries, which are more dependent on oil from the Middle East, the supply shock led to school and government office closures and orders to work from home, according to the International Energy Agency.
“The bottom line is that getting back to ‘normal’ will be a long process that will involve many parties and countries,” Barto said. “Having an agreement between the US and Iran to open the strait is just the beginning.”
Shipping industry expects slow recovery
The closure of the Strait of Hormuz has affected about 2% to 3% of the total volume of containerships used for global shipping, but higher oil prices and the disruption have affected the shipping industry more broadly, said Judah Levin, head of research at freight booking platform Freightos.
Josh Steinitz, chief strategy officer at business logistics platform ShipStation Global, said consumers may see higher shipping costs and more out-of-stock items online by the end of the year.
“I think the fuel surcharges, which then flow into shipping costs that get passed on to consumers, will still be with us for some time from many of the major carriers,” Steinitz said.
Flights will not be cheap right now
Industry experts have warned for months that even if the war ends, travelers should not expect an immediate drop in airfares.
A worker completes refueling a jet at DFW International Airport in Grapevine, Texas, in April. (LM Otero/AP/File)
Airlines typically purchase fuel in advance, adjust their schedules gradually and price tickets based on demand, meaning that lower oil and jet fuel prices may take several weeks or months to be absorbed into the cost of commercial flights.
“I think it’s unlikely that we’ll see a reduction or decline in flight costs any time this summer,” Columbia House said.
Gordon Ho, a professor at the University of Southern California business school, said fuel surcharges added by some airlines outside the U.S. are one of the first areas where travelers could seek relief.
“Consumers are going to say, ‘Wait a minute, why are you still charging me a fuel surcharge?’ Ho said.
Pressure on grocery prices will continue
Reopening the straitjacket is unlikely to bring immediate relief to grocery stores, according to David Ortega, a professor of food economics and policy at Michigan State University.
According to the Independent Grocers Alliance, a group of 7,500 global supermarkets, fuel accounts for about 15% to 30% of the total cost of food.
Grocery prices are expected to rise 3.2% this year. (name y huh/ap/file)
But like the energy shock caused by the Iran war, it could take months to disrupt food supply chains and send grocery prices soaring. And once prices go up, it takes a long time for them to come back down, especially when the future is unpredictable, Ortega said.
“We are still likely to see inflationary pressures on food in the coming months,” Ortega said. “There is still a lot of uncertainty over how the reopening will play out, and it will take time for fuel, diesel and retail fertilizer prices to come back down.”
Rabobank, which is based in the Netherlands, said it expected war-related food price inflation to peak in Europe next year. According to the U.S. Department of Agriculture, grocery prices in the U.S. are expected to rise 3.2% this year, compared to a historical average of 2.6%.
Farmers are worried about fertilizer
Reopening the Strait of Hormuz would also be a welcome change for farmers and food production globally. Before the war began, about 30% of the world’s fertilizer passed through waterways. Prices soared as supplies were effectively cut off, and it would probably take a long time for shipments to return to pre-war levels.
The consequences of the shortages farmers face now may be even more serious in the future.
Many farmers around the world are going through the planting season without the fertilizer they need or paying exorbitant prices for both the fertilizer and fuel needed to produce and transport their products. The UN World Food Program expects this to have a “devastating impact” on crop yields – and as a consequence, on food prices and food availability – in the coming months.
Retailers do not expect cost relief
Andy Polk, senior vice president of the Footwear Distributors & Retailers of America trade group, said U.S. retailers that sell shoes were encouraged by falling gasoline prices, which they hoped would mean Americans would have more money to spend on back-to-school shopping.
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However, shoe companies anticipate their costs to remain higher in the near future, Polk said. Group members keep two to three months’ inventory of finished products, but suppliers may charge more for the materials in their next order, he said.
Most shoes sold in the U.S. are imported, and Polk said he expects shipping costs to remain high throughout the rest of 2026 and 2027.
U.S. tariffs imposed last year have made it more difficult for shoe sellers to absorb the higher costs or pass them on to customers, he said. According to government data, footwear prices in May were 5.2% higher than the same month a year earlier.
Associated Press writers Kathy Bussewitz, Anne D’Innocenzio, and Wyatt Grantham-Phillips in New York, Dee-Ann Durbin in Detroit and Rio Yamat in Las Vegas contributed to this report.
