A tentative deal to end the Iran war makes it reasonable to ask how soon prices will drop for gasoline, groceries, airline tickets and other items that got more expensive during the conflict.
Not so fast, experts say.
Even after oil starts flowing again from the Middle East, it could take a while for consumers to see a difference at local fuel pumps, supermarkets and other places they shop, according to economists and industry analysts.
Fighting over the Strait of Hormuz disrupted not only supplies of crude and refined fuel but also the supply chains for fertilizer, food and even footwear. Businesses expect higher costs to linger, which means their customers might need to prepare for that too.
“It is not clear, despite three months of war, that anything has been achieved that makes the American consumer better off,” Brett House, an economist who teaches at Columbia Business School, said. “In fact, by almost any measure, not just the American consumer, but the world, is worse off as a result of this attack.”
If the deal between the U.S. and Iran holds, here’s how experts see the war’s effects receding — or not — in the weeks ahead:
US motorists can expect some gas price relief
Following news of the tentative agreement, oil prices fell Monday to about $80 for a barrel of U.S. benchmark crude. That compares to $67 per barrel before the war and the price of over $120 a barrel reached earlier in the conflict.
Refineries typically pay for crude oil a month or more in advance, so even after oil prices drop, they won’t immediately be processing cheaper products.
“The tendency of gasoline prices to fall slowly is partly because the raw material takes weeks to work through the system until it’s delivered to consumers,” said Michael Lynch, a distinguished fellow at the nonpartisan Energy Policy Research Foundation.
In places without enough refining capacity to meet their needs, such as the West Coast of the U.S., gas prices will take longer to drop, said Mark Barteau, a professor of chemical engineering and chemistry at Texas A&M University.
In some Asian and African countries that rely more on oil from the Middle East, the supply shock led to school and government office closures and instructions to work from home, according to the International Energy Agency.
“The bottom line is that getting back to ‘normal’ will be a lengthy process involving many parties and countries,” Barteau said. “Getting an agreement between the U.S. and Iran to open the strait is just the beginning.”
Flights won’t get cheaper right away
Industry experts have spent months warning that even if the war ended, travelers should not expect airfares to go down immediately.
Airlines typically buy fuel in advance, adjust their schedules gradually and price tickets based heavily on demand, meaning lower oil and jet fuel prices can take weeks or months to get factored into the cost of commercial flights.
“I think it’s unlikely that we’re going to see a retreat or reduction in the cost of flying at any point this summer,” Columbia’s House said.
Fuel surcharges that some airlines outside the U.S. added are one of the first areas where passengers might get a reprieve, said Gordon Ho, a professor at the University of Southern California’s business school.
“Consumers are going to say, ‘Wait a minute, why are you still charging me a fuel surcharge?’” Ho said.
Pressure on grocery prices will likely continue
Reopening the strait is unlikely to deliver instant relief at the grocery store, according to David Ortega, a professor of food economics and policy at Michigan State University.
Fuel accounts for roughly 15% to 30% of the total cost of food, according to the Independent Grocers Alliance, a grouping of 7,500 global supermarkets.
But it can take months for an energy shock like the one caused by the Iran war to wind through the food supply chain and raise grocery prices. And once prices go up, it takes them a long time to come back down, especially when the future is unpredictable, Ortega said.
“We’re likely still looking at inflationary pressure on food in the coming months,” Ortega said. “There’s still a good deal of uncertainty about how the reopening will unfold, 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 sometime next year in Europe. In the U.S., grocery prices are expected to rise 3.2% this year, which compares to a historical average of 2.6%, according to the U.S. Department of Agriculture.
Farmers remain strapped for fertilizer
Reopening the Strait of Hormuz would also be a welcome change for farmers and the production of food globally. Roughly 30% of the world’s fertilizer passed through the waterway before the war began. Prices soared as the supply was effectively cut off, and shipments probably will take a long time to return to pre-war levels.
The consequences of the shortage facing farmers now may only intensify down the road, regardless.
Many farmers around the world are going through planting seasons without the fertilizer they need or paying sky-high prices for both fertilizer and fuel needed to produce and transport their products. The World Food Program of the United Nations expects this to have a “devastating impact” on crop yields — and consequently, food prices and the availability of food — for months to come.
Retailers don’t anticipate a cost reprieve
U.S. retailers that sell shoes were encouraged to see falling gasoline prices, hoping they would mean Americans have more money to spend on back-to-school shopping, said Andy Polk, senior vice president of the Footwear Distributors and Retailers of America trade group.
However, shoe companies anticipate their own costs staying higher for the foreseeable future, Polk said. The group’s members keep a two- to three-month inventory of finished products, but their next orders may include suppliers charging more for materials, he said.
Most of the footwear sold in the U.S. is imported, and Polk said he expects shipping costs to remain higher for the rest of 2026 and 2027.
U.S. tariffs imposed last year have made it more difficult for shoe sellers to absorb higher costs or pass them on customers, he said. In May, footwear prices were 5.2% higher than the same month a year earlier, according to government figures.
Shipping industry expects a slow recovery
Judah Levine, head of research at the freight booking platform Freightos, said the Straight of Hormuz closure has affected about 2% to 3 % of the total volume of container ships that are used for global shipping, but higher oil prices and disruption have impacted the shipping industry more broadly.
Josh Steinitz, chief strategy officer of the business logistics platform ShipStation Global, said consumers might notice higher shipping costs and more out-of-stock items online until the end of the year.
“I think fuel surcharges, which then flow into shipping costs, which then get passed along to consumers, are still going to be with us for quite sometime from many of the major carriers,” Steinitz said.
Associated Press writers Cathy Bussewitz, Anne D’Innocenzio, Wyatte Grantham-Philips, Dee-Ann Durbin, and Rio Yamat contributed to this report.
—Mae Anderson, AP Business Writer
