The first signs of de-escalation of the crisis surrounding Iran and the Strait of Hormuz are already having a tangible effect on the global energy market. Following reports of a temporary truce and the partial reopening of the strait, oil prices saw a sharp decline, and in many countries, a gradual reduction in retail fuel prices began. This eases the pressure on households and businesses, which faced some of the highest gasoline and diesel prices in decades at the beginning of the year.
Oil falls: from war-time peaks to double-digit values
After the start of the conflict in Iran and the partial blockade of the Strait of Hormuz – through which approximately 20% of the world's seaborne oil exports pass – energy commodity prices jumped sharply. On peak days, "Brent" crude quotes exceeded "120 dollars per barrel", and gasoline on US exchanges rose by about "30 percent" within a month.
Since February, however, a series of statements by President Donald Trump and the Iranian leadership regarding their readiness for negotiations led to a strong one-day correction: on "February 1" Brent fell by about "5 percent" to "65.6 dollars per barrel", and the American WTI grade – to "61.6 dollars". A new drop followed in April, when information about a two-week truce and the temporary opening of the Strait of Hormuz brought Brent down to about "95 dollars" – a decline of nearly "13 percent" in a day.
Gasoline gets cheaper after the March jump
Oil quotes are transferred almost directly to fuel prices. In the US, gasoline futures reached a historic increase of "30 percent" for March, when the Hormuz blockade stopped almost "20 percent" of global oil flows and sparked fears of a deficit. After that, at the first signs of de-escalation, prices began to slide downward.
By the end of March, gasoline futures in the US fell to about "3.10 dollars per gallon", and the decline continued in subsequent sessions. In parallel, heating oil – a key heating fuel – lost about "17 percent" of its value in a day, and gasoline – nearly "10 percent". In many markets, this translated into a real reduction in prices at gas stations, albeit with some delay relative to market movements.
Europe: lower prices, but still above pre-war levels
In Europe, signals of a continued truce between the US and Iran and plans to expand the ceasefire led to further decreases in oil prices. At the end of May, Brent futures fell to about "92.5 dollars per barrel" – the lowest level for the month, but still above prices before the conflict.
Against this backdrop, some European countries began to adjust fuel prices downward. In Germany and France, regulators reported a reduction in the average prices of gasoline and diesel by "5 to 8 percent" compared to the March peaks. In Italy and Spain, the reduction of fuel excise taxes temporarily increased the effect of lower market prices to compensate for the hit to households.
Russia: administrative measures for the domestic market
In Russia, the government combined market and administrative tools to control the spike in fuel prices. After wholesale gasoline prices rose by about "15 percent" in March following the global energy shock, authorities temporarily banned the export of some oil products. This brought down wholesale quotes, which lost about half of their "war-time" growth.
Officially, the cabinet promised to protect the domestic market through the "fuel damper" mechanism, which compensates for the difference between domestic and export prices for producers. In practice, however, authorities periodically resort to export bans and even rationed sales at gas stations in individual regions to prevent a deficit. As a result, retail prices are stabilizing, albeit at levels still higher than before the war.
Iraq, the Gulf, and OPEC+: production is adjusting
In an attempt to stabilize the market, several Gulf countries – Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain – collectively reduced their output in March by about "7.5 million barrels per day". In parallel, some countries in OPEC+ decided to keep the pause on production increases, taking into account seasonal factors and the unstable situation around Iran.
These decisions temporarily keep prices above pre-war forecasts, but the de-escalation of the conflict and the partial opening of Hormuz are reducing the "geopolitical premium" built into the quotes. Thus, some of the countries can afford a moderate reduction in fuel prices for end consumers without risking a dramatic drop in budget revenues.
Outlook: relief, but not a final solution
International energy agencies warn that the current drop in oil and fuel prices is the result of a "fragile hope" for a diplomatic breakthrough. Any new escalation around the Strait of Hormuz or a failure of negotiations between the US and Iran could again return prices to triple digits and force governments to seek new compensatory mechanisms.
For consumers, lower gasoline and diesel prices in the spring and early summer are a visible relief after the shocking price hikes. But analysts remind us that lasting stabilization is only possible with a sustainable political resolution to the conflict and the normalization of flows through the Strait of Hormuz. Until then, every "price drop" for fuel will remain in question – caught between the hope for peace and the risk of a new price spike.