Global oil prices fell sharply on news of a ceasefire that ended, at least for now, the 12-day war between Israel and Iran. Prices at the pump had surged since the United States bombed Iranian nuclear facilities at Israel’s request on Saturday, June 21.
American consumers felt the effects of the war even though the United States imports little oil from the Middle East –– and, as of last year, none from Iran.
Spike avoided
The Brent crude benchmark fell by 7% on Tuesday, June 24, after President Donald Trump announced Israel and Iran had agreed to a ceasefire. At $66 a barrel, crude was selling at about $3 less a barrel on Tuesday than on June 12. That was one day before Israel began bombing Iran after saying the Islamic Republic was on the verge of developing a nuclear weapon.
Prices rose to almost $80 a barrel over the course of the war. Experts predicted that they could go even higher if Iran were to close the Strait of Hormuz, a key shipping channel connecting the Gulf of Oman and the Persian Gulf.
Economists at Goldman Sachs said Monday, June 23, that prices might quickly climb above $100 a barrel, The Guardian reported.
The strait’s closure would have been especially harmful to one of the biggest consumers of Iranian oil –– China. Secretary of State Marco Rubio said such a move would amount to “economic suicide” for Iran, and he urged China and other countries to keep the strait open.
“It would hurt other countries’ economies a lot worse than ours,” Rubio told Fox News. “It would be, I think, a massive escalation that would merit a response not just by us but from others.”
China was unlikely to respond to Rubio’s request, The New York Times reported.
“It would be improper, or even counterproductive, to discuss this with the United States, or to exert pressure on Iran at the request of the United States,” Wang Yiwei, the director of the Institute of International Affairs at Renmin University in Beijing, told the Times.
Pain at the pump
Since 2020, the United States has exported more oil than it imports, and almost two-thirds of foreign oil comes from Canada and Mexico, according to the U.S. Energy Information Administration. Far smaller amounts come from OPEC nations, primarily from Saudi Arabia, Iraq, Venezuela and Nigeria.
Iran has shipped no oil to the United States since 2023. That year, it provided 5,000 of the 1.3 million barrels imported from OPEC.
Nevertheless, the conflict between Israel and Iran drove up prices at the pump across the United States.
The national average for a gallon of regular gas went up 8 cents last week, to $3.22, according to AAA. The average price increased by 20 cents a gallon in Michigan, 18 cents in Delaware, 17 cents in Minnesota and 15 cents in Florida and Iowa.
Still, the nationwide average was 20 cents a gallon lower than it was one year ago.
Prices should come down quickly because of the ceasefire, Patrick De Haan, head of petroleum analysis at GasBuddy, told Newsweek.
“Based on these new developments, I think what the market is essentially saying here is that the conflict is winding down,” De Haan said. “The Trump administration has said they don’t plan to retaliate. Iran may just be kind of ending this.”
‘Drill, baby, drill’
Trump, who promised to lower gasoline prices if he returned to the White House, appeared to be worried about the war’s impact on U.S. consumers.
In a Monday post on his Truth Social website, Trump wrote: “EVERYONE, KEEP OIL PRICES DOWN. I’M WATCHING! YOU’RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY. DON’T DO IT!”
Later, he called for increased domestic oil production, even though it has increased by 41% over the past decade.
“To the Department of Energy: DRILL, BABY, DRILL!!!” he wrote. “And I mean NOW!!!”
