Brent crude oil futures (BZ) nosedived 12% after Iran announced that it would open up the Strait of Hormuz for the duration of the 10-day Israel-Lebanon ceasefire. However, it could take some time for that to be reflected in gas prices.
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Forget margin or options. Here's how the pros trade QQQPatrick De Haan, GasBuddy’s Head of Petroleum Analysis, expects prices to drop to between $3.65 and $4.00 per gallon within three to four weeks if tensions remain cool between the U.S. and Iran. That’s still well above the price of $2.98 seen just before the onset of the war.
Gas Prices Lag Oil Moves by Several Weeks
David Doherty, head of natural resources research at BloombergNEF, notes that “pump prices rise like a rocket and fall like a feather.” He expects a three-week lag between crude prices and gas prices, although the relationship is also impacted by other factors, including refining costs, supply chains, and seller markups.
Oil volatility will persist until the war comes to a close and Hormuz permanently opens, experts say. The latter may have already been achieved, with President Trump saying on Friday that Iran has agreed to never close the waterway again.