economy
Energy experts say gas prices are likely to remain high for months. Here's why.
American motorists would face pain at the pump for months even if the U.S. and Iran strike a peace deal and move quickly to reopen the Strait of Hormuz, according to energy experts.
TL;DR
- Gas prices are expected to remain high for months, even with a U.S.-Iran peace deal and the reopening of the Strait of Hormuz.
- The Strait of Hormuz is a critical waterway, normally accounting for 20% of global crude and liquefied natural gas supplies.
- Reopening the strait and fully normalizing oil supplies is a slow, multi-month to multi-year process.
- Oil prices may drop immediately upon a deal announcement, but gasoline prices will lag due to supply chain delays and the need to replenish low global inventories.
- It will take time for oil-producing nations to restart facilities and return to typical output levels, and then for that oil to reach refineries and then the market.
- U.S. inflation has been impacted by rising energy costs due to the Middle East conflict.
- Americans have spent significantly more on gas and diesel since the Iran war began.