oil price

WASHINGTON — A spectacular economic upturn is on its way, President Trump promised Americans last week, galvanized in part by a deal brokered this month to end his war with Iran.

“Very soon you’ll be at $2.50 a gallon for gasoline,” Trump told a crowd Wednesday night on the National Mall. The next year, he said, “is set for an economic boom the likes of which no nation has ever seen before.”

Economists are skeptical. The effects of the war and other factors driving inflation are likely to stick around for months, experts say, presenting an ongoing challenge to American households — and to Trump’s party as it seeks to retain control of Congress in November’s midterm elections.

Yesenia De La Torre, 24, from Culver City pumps gas at the Chevron gas station on Sawtelle Boulevard and Culver Boulevard on June 15. Despite an agreement announced Sunday to end the Iran war and open the Strait of Hormuz, high oil, gasoline prices and energy supply problems won’t be solved overnight.

(Kayla Bartkowski / Los Angeles Times)

The war’s end will not create “a complete snap-back,” said Patrick Harker, professor at the University of Pennsylvania Wharton School and former president of the Federal Reserve Bank of Philadelphia.

“Markets are still cautious, and the infrastructure that’s been destroyed [in the Middle East] is going to take a while to re-create,” Harker said. “Inflation’s going to stay elevated for a while.”

Oil prices were dropping last week — falling to their prewar level Friday — and average gas prices fell by 7 cents per gallon over a week ago. But it will take significant time for oil shipping to ramp up through the Strait of Hormuz, infrastructure to be rebuilt and gas prices to drop, said Michael Negron, senior fellow for economic opportunity at the Center for American Progress.

“I would expect there to be a continued inching downward,” Negron said, but “we’re not going to just go back within weeks to $2.90 per gallon.”

That means the prices of gas and of other essentials aren’t likely to improve dramatically before the midterms, in which affordability has become a driving issue. It could heighten challenges for Republicans, who are defending their majorities in the U.S. House and Senate, as Democrats seek to leverage the issue to gain ground.

Positive messaging about the economy from Trump and other officials “doesn’t really resonate” with Americans who are struggling to make ends meet, said Gina Plata-Nino of the Food Research and Action Center, a national anti-hunger advocacy organization.

“When you’re still making the same amount of money but there’s less for you to be able to pay [for] your basic needs — gas is more expensive, food is more expensive — it doesn’t really add up,” she said.

A fruit stand on West 7th Street sells bananas for $2 per bunch.

(Carlin Stiehl / For The Times)

Americans question the costs

The Iran war has cost the average American household between $775 and $1,300 so far in fuel and taxpayer costs, according to an analysis by Roger Pielke, a senior fellow at the American Enterprise Institute.

The national average gas price sat at $3.90 on Friday, according to AAA, and California’s average was $5.48 per gallon, down 13 cents from a week earlier.

The increase in oil prices has also affected diesel and fertilizer prices, creating a ripple effect through several sectors, including agriculture. Consumer prices rose 4.1% in May from a year earlier, putting the inflation gauge at a three-year high.

Trump has leaned on a bullish message about the economy, but he has largely dismissed Americans’ worries about affordability, calling it a “fake word” and a “hoax.” Last week, he undermined the first major progress by Congress on the issue, refusing to sign a bipartisan housing affordability bill after both chambers passed it.

President Donald Trump closes his eyes as Dr. Ben Carson, left, speaks during an event with the White House Religious Liberty Commission in the Oval Office on Friday.

(Anna Moneymaker / Getty Images)

Meanwhile, the president’s approval rating on the economy dropped to 33% last week in an NPR/PBS News/Marist Poll — his lowest ever for that poll and 3 points below former President Biden’s worst reading on the question during his term.

Nearly four-fifths of respondents said that gas prices present some sort of strain, with 34% categorizing it as a major strain and 44% calling it a minor strain. Half of respondents who said they were not vacationing this summer said cost was the reason.

And only 23% of Americans say the war was worth the costs, according to a Reuters/Ipsos poll conducted days after the Trump administration announced the framework agreement to end the conflict earlier this month.

“People [are] just feeling like they’re getting left behind,” Harker said. “That’s a very real, palpable feeling when you go out and talk to people. They’re worried.”

The president and his party need a midterms message that “real economic change” is coming, said Brian Reisinger, a rural policy analyst in Wisconsin and a former GOP strategist.

“It has to be substance behind the sell,” Reisinger said.

Senate Majority Leader John Thune (R-S.D.) speaks to reporters after the weekly Senate policy luncheons at the U.S. Capitol on Tuesday in Washington, D.C. Thune spoke on a meeting with President Trump on the Iran deal.

(Kevin Dietsch / Getty Images)

U.S.-Iran talks on shaky ground

Trump’s boosters have hailed the Iran deal as a victory for the president. And Trump has justified the shock to gas prices as “worth it not to have a nuclear weapon” in Iran, though the war has not achieved the president’s stated aims, which included the elimination of its nuclear program.

“President Trump was clear all along that there would be short-term, temporary disruptions to energy markets, and that oil and gas prices will quickly fall as soon as the Iran situation is resolved,” White House spokesperson Taylor Rogers said Friday.

How rapidly the conflict will be resolved is not yet clear. The U.S.-Iran negotiations were on shaky ground by week’s end, with each country offering diametrically opposed messaging on the status of key points of negotiation.

Analysts say much of the increase in traffic through the strait has been driven by the return of Iranian oil to global markets. Trump agreed in the controversial deal with Iran to lift sanctions on Iranian oil, allowing Tehran to resume trading its most valuable export and breaking with decades of U.S. policy.

The unpredictability of the talks is another factor keeping energy companies, shippers and insurers cautious for now, Negron said.

“Everything is to be negotiated in the next nearly two months,” he said. “It is natural to expect there to be additional risk priced into each barrel of oil, into the insurance people are paying, just because of the volatility and uncertainty of where we are.”

WASHINGTON — A framework agreement to end the U.S. war with Iran is all but settled, pending sign-off from the presidents of the two warring sides, President Trump said Friday, projecting optimism that a deal could finally be at hand.

Yet doubt cast a shadow over the diplomatic process entering the weekend as Trump faced a politically fraught decision to enter an agreement that would invariably require significant concessions to Tehran.

The negotiations have faced severe headwinds in recent days, with both sides accusing the other of violating a fragile ceasefire that has largely stopped the fighting since April.

On his Truth Social site, Trump said he had summoned his top aides to the White House Situation Room to decide on the deal.

The agreement would see an end to the U.S. naval blockade on Iranian ports and the removal of Iranian mines from the Strait of Hormuz, an international waterway through which 20% of the world’s energy supply passes each day. The strait, Trump wrote, will reopen with “no tolls” for “unrestricted shipping traffic, in both directions.”

And “Iran must agree that they will never have a Nuclear Weapon or Bomb,” Trump wrote, noting that Iran’s stockpile of highly enriched uranium, the key ingredient for nuclear weapons, “will be unearthed by the United States (which, it is agreed, is the only Country, along with China, with the mechanical capability of doing so!), in close coordination and conjunction with the Islamic Republic of Iran, plus the International Atomic Energy Agency, and DESTROYED.”

“No money will be exchanged, until further notice,” he added.

Treasury Secretary Scott Bessent also said the deal would require Iran to disavow the continuation of its domestic nuclear program — a diplomatic feat never before achieved throughout a quarter century of international negotiations over Iran’s nuclear work.

It is unclear whether Tehran would go that far. And Iran’s negotiators expressed defiance on Friday, stating that there was “no trust in guarantees or words” from the American side.

“No step will be taken before the other side acts first,” said Mohammad Bagher Ghalibaf, the speaker of Iran’s Parliament. “We do not gain concessions through dialogue, but through missiles.”

It remains unclear when the Trump administration would ease sanctions on Iran, how extensive that relief would be, or what form it would take — questions that fueled Republican criticism of the Obama-era nuclear deal more than a decade ago.

The working diplomatic document would formally extend the existing ceasefire for 60 days, allowing for a more detailed negotiation to take place over Iran’s nuclear program. But the truce as it currently stands is on perilous ground. Iran launched a ballistic missile on Thursday at Kuwait, a close U.S. ally, after American forces took “defensive” actions against Iranian missile launchers and mine laying boats it had launched in the strait.

The war has proven historically unpopular with the American public, and has seen oil prices soar since the U.S. military, in partnership with Israel, launched its first strikes against Iran in February.

Bessent said he is hopeful that oil prices would drop quickly once an agreement is signed. But industry analysts say the effects of the war on the oil market could last for months, if not years, with the stability of traffic through the Strait of Hormuz now in question for commercial shippers.

While oil has dropped to under $100 a barrel, markets appeared skittish on Friday over the prospects for a deal, with mixed messages appearing to emerge out of the region.

It is also unclear whether a U.S. agreement with Iran would in any way bind Israel’s hands in its military operations, either in Iran or in Lebanon, where an Iranian proxy militia, Hezbollah, has vowed to keep up the fight.

Israel has ramped up strikes against Hezbollah targets in recent days, jeopardizing a delicate ceasefire negotiated with the Lebanese government, a deal encouraged by the Trump administration in order to grease the wheels for its talks with Tehran.

Trump has been uncharacteristically silent on the prospects of an agreement in recent days, expressing cautious optimism in limited exchanges with reporters.

“It’s hard to say exactly when or if the president’s going to sign,” Vice President JD Vance, who has led the U.S. diplomatic team, told reporters, noting that “the nuclear stuff” is still subject to negotiation. “We’re going back and forth on a couple of language points.”

“I do think that we’ve made a lot of progress here,” Vance added. “Hopefully we’ll continue to make progress, and the president will be in a position where he can endorse the agreement. But obviously, that’s still TBD.”