Gasoline prices could fall slowly if the Strait of Hormuz stays open

Key Points:

• After the Strait of Hormuz was declared open to commercial vessels following nearly seven weeks of conflict, oil prices dropped 10% and U.S. stock markets rallied, sparking hopes for lower gasoline prices.
• Despite the reopening, experts caution that gasoline prices typically fall more slowly than they rise due to factors like tanker transit times, refinery ramp-up, shipping congestion, and lingering security concerns in the region.
• Analysts predict gradual declines in gas prices, with estimates suggesting a possible drop of 50 cents per gallon within a couple of weeks if the situation remains stable, though full normalization could take months.
• The reopening faces challenges such as clearing mines, managing tanker traffic jams, and convincing ship owners to resume operations amid ongoing geopolitical uncertainties.
• Damage to oil infrastructure in the Middle East and production slowdowns during the conflict further delay price normalization, but some producers like Saudi Arabia have the capacity to quickly ramp up output once shipping stabilizes.