Energy markets

A tentative deal to reopen the Strait of Hormuz will not immediately lower costs for gasoline, groceries, or air travel, according to economists and industry analysts. While the agreement marks a significant step toward stabilizing global supply chains, systemic delays in fuel refining, agricultural logistics, and retail inventory management mean consumers should expect inflationary pressures to persist for months.

Why Gas Prices Won’t Drop Immediately

Consumers shouldn’t expect an overnight decline in pump prices despite the drop in crude oil to roughly $80 a barrel, according to Michael Lynch of the Energy Policy Research Foundation. Because refineries typically purchase crude oil weeks in advance, the current supply of more expensive fuel must cycle through the system first. Mark Barteau, a professor of chemical engineering at Texas A&M University, notes that regions with limited refining capacity, such as the U.S. West Coast, will face the longest delays in price adjustment. While prices have fallen from the conflict-era peak of $120 a barrel, the transition back to pre-war price levels remains a gradual process rather than an instantaneous correction.

The Reality of Grocery and Food Inflation

Relief at the supermarket is unlikely in the short term, as fuel costs account for 15% to 30% of total food pricing, according to the Independent Grocers Alliance. David Ortega, a professor of food economics at Michigan State University, explains that energy shocks move slowly through the food supply chain. Once prices rise, they often remain elevated due to lingering uncertainty and the time required for fertilizer and diesel costs to stabilize. Unlike volatile stock markets, food retail prices are notoriously “sticky,” meaning they resist downward movement even after the initial supply chain disruption has been resolved.

How Air Travel Costs Remain High

Travelers hoping for cheaper flights this summer will likely be disappointed, according to Brett House, an economist at Columbia Business School. Airlines hedge their fuel costs by purchasing supplies in advance, which prevents immediate price drops from being passed to the passenger. Additionally, airfare is heavily influenced by seasonal demand rather than just fuel input costs. While some international carriers may eventually remove fuel surcharges, Gordon Ho, a professor at the University of Southern California, suggests that passengers will need to remain vigilant, as airlines are often slow to retract these additional fees even after their own operating costs decrease.

Pro Tip: Managing Shipping Costs

If you are shopping online, expect higher shipping fees and potential stock shortages to last through the end of the year. Josh Steinitz of ShipStation Global notes that fuel surcharges are still being passed along by major carriers, which effectively increases the price of e-commerce goods regardless of the war’s status.

Footwear and Retail Inventory Challenges

Retailers are struggling to absorb costs that have already been locked into their supply chains. Andy Polk of the Footwear Distributors and Retailers of America reports that most shoe companies maintain a two- to three-month inventory, meaning current stock was purchased at higher, war-impacted rates. With footwear prices already 5.2% higher in May compared to the previous year, retailers are finding it difficult to lower prices for consumers while facing continued shipping expenses. Retailers expect these elevated costs to persist through the remainder of 2026 and into 2027.

Frequently Asked Questions

• When will gas prices return to pre-war levels?
  Economists suggest a return to normalcy is a lengthy process. Because refineries operate on a lag, it takes weeks for cheaper crude oil to reach the pump.
• Why are grocery prices still rising?
  Food prices are affected by a combination of fuel costs and fertilizer shortages. According to Michigan State University, it takes months for energy shocks to fully cycle through the global food supply chain.
• Should I delay my travel plans?
  Experts like Brett House suggest that airfare is unlikely to drop this summer, as airlines price tickets based on demand and long-term fuel hedging strategies.

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