Will Gas Prices Go Down This Summer? The Iran Ceasefire Just Fell Apart
Quick Answer
The U.S. Energy Information Administration forecast that gas prices would fall to a summer average of about $3.80 a gallon in the third quarter of 2026, down from over $4.20 in the spring. That forecast, published July 7, assumed the U.S.-Iran ceasefire signed on June 18 would hold and oil production would keep recovering.
Update, July 20: It didn't just fail to hold — it collapsed further, then kept collapsing. The U.S. struck more than 80 targets in Iran over the July 12-13 weekend, Iran closed the Strait of Hormuz again, and the U.S. reimposed a naval blockade on Iranian ports on July 14. By July 18-19, Iran had declared the ceasefire effectively over, with both sides expanding strikes beyond military targets to critical infrastructure. Brent crude has since traded as high as $84.64 a barrel, gasoline futures have climbed to $3.41/gal — the highest since May 22 — and AAA's national average reached $3.998 on July 19, closing in on $4 a gallon for the first time since the ceasefire was signed. The EIA's $3.80 forecast now looks like the optimistic case, not the baseline.
Update, July 21: The national average crossed $4 a gallon for the first time since the ceasefire was signed, reaching $4.019 — up 16 cents from a week earlier and up from $3.938 a month ago. The U.S. carried out another round of strikes on Iran the night of July 20, and Brent crude touched as high as $91 a barrel intraday before easing back toward the high $80s amid reports of renewed contact between Iran and international mediators. New disruption has also spread beyond the Strait itself, with an Iranian strike reported on a Kuwaiti oil facility and Houthi forces announcing a separate blockade against Saudi Arabia.
Update, July 23: Prices kept climbing and the conflict widened again. AAA's national average rose to $4.09 a gallon — up 15 cents from a week earlier — with most states now averaging $4 or more. Houthi forces said they struck two Saudi oil tankers in the Red Sea, the U.S. carried out a 12th consecutive night of strikes on Iran, and Iran retaliated with strikes on Kuwait and Jordan.
Update, July 25: Gas prices ticked up again to $4.11 a gallon, the 12th straight day of increases. But for the first time in two weeks, U.S. Central Command did not announce new strikes on Iran, and an Omani delegation visited Tehran to discuss managing ship traffic through the Strait of Hormuz. It's too early to call this de-escalation — this exact pause-then-escalate pattern has already played out twice this year — but it's the first signal in this cycle pointing away from further escalation rather than toward it.
Update, July 29: The pause broke within days. Iran's Revolutionary Guard fired ballistic missiles at U.S. forces in Jordan on the evening of July 28 in what CENTCOM called an "attempted surprise attack" — all missiles were intercepted, and the U.S. and Saudi Arabia struck back at Iran-backed militia sites in Iraq. President Trump has vowed heavier retaliation. AAA's national average eased slightly to $4.091 on July 29 as the brief pause cooled prices before the attack, even as Brent and WTI crude ticked back up afterward and Iran rejected an Omani proposal to share Strait of Hormuz shipping lanes.
Update, August 5: Still no de-escalation. The memorandum of understanding between Washington and Tehran has collapsed, stranding a second group of vessels in the Gulf, and a cargo ship was struck by a projectile northeast of Khasab, Oman on August 3 at the same spot as an August 2 incident. Strait transits rose to 84 for the week of July 27 to August 2 from 45 the week before, but remain far below the pre-war level of more than 100 a day. AAA's national average was $4.080 on August 5.
Update, August 11: The EIA answered the question this article has been asking since July. Its August 11 Short-Term Energy Outlook raised the third-quarter 2026 retail gasoline forecast from $3.80 to $4.01 a gallon and the third-quarter Brent assumption from $74.03 to $85.21 a barrel, citing continued severe constraints on Strait of Hormuz transits. AAA's national average was $4.0116 on August 11, down from $4.0892 a week earlier — effectively sitting on the EIA's revised forecast rather than 6% above it. The gap this article tracked all summer closed because the forecast moved, not because prices fell.
Written by Morgan Ellis, Editor at GearUp Insights | About the Editor | Last reviewed: August 11, 2026
The Timeline: From Ceasefire to Blockade in Four Weeks
Gas prices in 2026 have moved in several distinct phases, and understanding where we are in that sequence matters more than any single headline number.
| Date | What Happened | Price Signal |
|---|
| Feb 26, 2026 | Just before the conflict began | $2.98 (AAA avg) |
| May 21, 2026 | Wartime peak, ~12 weeks into the conflict | $4.56 (AAA avg) |
| Jun 18, 2026 | U.S.-Iran ceasefire memorandum of understanding signed | — |
| Jul 3, 2026 | Prices had fallen steadily for weeks post-ceasefire | $3.83 (AAA avg) |
| Jul 7-8, 2026 | Ceasefire effectively breaks down; renewed strikes reported in the Gulf | — |
| Jul 9, 2026 | AAA reports prices rising overnight for the first time in weeks | $3.84 (+5¢ overnight) |
| Jul 12-13, 2026 | U.S. strikes 80+ targets in Iran over the weekend; Iran's navy closes the Strait of Hormuz again | Brent jumps ~8% to $82.03 |
| Jul 13, 2026 | Trump announces a reimposed blockade plus a 20% Hormuz transit toll; the IMO objects, calling the toll without legal basis | WTI to $77.10 |
| Jul 14, 2026 | Toll plan walked back, but the naval blockade on Iranian ports takes effect at 4pm EST | — |
| Jul 16, 2026 | Brent crude trading well above the EIA's $74 Q3 forecast | $84.64/barrel |
| Jul 17, 2026 | Gasoline futures at a seven-week high | $3.32/gal (+10.7% over 1 month) |
| Jul 18-19, 2026 | Iran declares the ceasefire effectively over as both sides expand strikes beyond military targets to critical infrastructure | AAA avg nears $4.00/gal |
| Jul 20, 2026 | Gasoline futures extend gains to their highest level since May 22 | $3.41/gal (+14% over 1 month) |
| Jul 21, 2026 | AAA national average closes above $4/gallon for the first time since the ceasefire was signed; U.S. conducts another round of strikes on Iran | $4.019 (AAA avg) |
| Jul 22, 2026 | Wire reports describe an 11th consecutive night of U.S. strikes on Iran; Houthi forces threaten Saudi oil vessels and announce a blockade of Saudi Arabia; a separate attack hits the Caspian Pipeline Consortium terminal in the Black Sea | $4.06 (AAA avg) |
| Jul 23, 2026 | Houthi forces strike two Saudi oil tankers (Encelia, Layla) in the Red Sea; U.S. conducts 12th consecutive night of strikes on Iran; Iran retaliates with strikes on Kuwait and Jordan | $4.09 (AAA avg) |
| Jul 25, 2026 | U.S. does not announce new Iran strikes for the first time in two weeks; Omani delegation visits Tehran to discuss Hormuz ship-traffic management | $4.11 (AAA avg) |
| Jul 27, 2026 | Trump administration reportedly signals a pause in further escalation; oil prices fall roughly 8% on the news | — |
| Jul 28, 2026 | Iran's IRGC fires ballistic missiles at U.S. forces in Jordan (5:45pm ET); Jordan intercepts 5, CENTCOM confirms all intercepted; U.S. and Saudi forces strike Iran-backed militia sites in Iraq; Iran rejects Oman's Hormuz-sharing proposal | Brent ~$83/barrel (+1%) |
| Jul 29, 2026 | Trump vows heavier retaliation ("our turn"); AAA average eases slightly as the pre-attack pause partly offsets new escalation | $4.091 (AAA avg) |
Source: AAA daily and weekly national average data, AAA Newsroom press releases; oil and gasoline futures data as of the dates shown.
The initial reversal on July 9 was small in dollar terms—a nickel overnight is not a crisis. What's happened since is not small. Brent crude is now trading roughly 14% above the EIA's own Q3 forecast of $74/barrel, and gasoline futures are at their highest level in seven weeks. AAA's own July 9 release was titled, plainly, "Gas Prices Reverse Course and Start Rising Again" — and the situation has escalated considerably since that headline ran.
Why the EIA's Forecast Is Now in Question
The EIA's Short-Term Energy Outlook, released July 7, 2026, built its summer forecast on a specific assumption: that the June 18 ceasefire would hold, oil production disrupted by the conflict would keep recovering toward pre-war levels, and shipping through the Strait of Hormuz would keep normalizing.
Under that assumption, the EIA projected:
- Brent crude averaging $74 per barrel in the third quarter of 2026, down $27 from the prior month's outlook
- U.S. gasoline averaging $3.80 per gallon in Q3 2026, down from more than $4.20 in Q2
- Continued softening into 2027, with Brent averaging around $65
That forecast is now built on an assumption that didn't survive the week it was published. The International Energy Agency's July Oil Market Report notes that benchmark crude prices, which had fallen to around $68 a barrel in early July—their lowest since January—rose again after the ceasefire was breached on July 7-8, trading back around $77 a barrel. The IEA explicitly flagged that the escalation "clouds the outlook" for the rest of the year. That was written before the blockade.
Update, July 17: From Ceasefire Collapse to Naval Blockade
The situation has moved through several more stages since the ceasefire first cracked. Over the weekend of July 12-13, the U.S. conducted strikes on more than 80 targets inside Iran. Iran's naval forces responded by closing the Strait of Hormuz again and resuming attacks on commercial shipping in the Gulf.
On July 13, President Trump announced on social media that the U.S. Navy would reimpose a blockade on Iranian ports and, initially, floated a 20% transit toll on vessels passing through the Strait of Hormuz. The International Maritime Organization objected, arguing the toll had no basis in international maritime law. By July 14, the toll plan had been walked back, but the naval blockade on Iran's coastline, ports, and oil terminals took effect at 4pm EST that day.
Markets reacted immediately: Brent crude jumped about 8% on July 13 alone, to $82.03 a barrel, with WTI crude following to $77.10. By July 16, Brent was trading at $84.64—roughly 14% above the EIA's own Q3 forecast. Gasoline futures reached $3.32/gal on July 17, a seven-week high, up nearly 11% over the trailing month.
Supply data adds to the picture. The EIA's weekly petroleum report for the week ending July 10 showed gasoline inventories fell by 1.5 million barrels and now sit roughly 14 million barrels below the five-year seasonal average—the lowest level for this time of year since 2012. The gasoline crack spread (the refining margin between crude and finished gasoline) has widened to around $59 a barrel, the highest since June 2022, meaning refiners are charging more to turn crude into gasoline even before crude costs are factored in.
None of this means the EIA's forecast was wrong when it was published. It means the single condition the entire summer forecast rested on—a holding ceasefire—failed within the same week the forecast came out, and has continued to deteriorate since.
Update, July 20: The Ceasefire Is Declared Over
The deterioration didn't stop at the naval blockade. In the days since, Iran has declared the U.S.-Iran ceasefire effectively over, and both sides have expanded their strikes beyond military targets to critical infrastructure. That marks the second collapse of the truce signed on June 18 — and, counting the two-week ceasefire attempted back in April, the third failed attempt at durable de-escalation since the conflict began.
The retail price data now reflects that shift. AAA's national average climbed to $3.94 a gallon on July 16 and to $3.998 — effectively $4.00 — by July 19, the highest reading since the ceasefire was first signed and closing in on the spring's wartime peak of $4.56. Gasoline futures extended their climb to $3.41/gal on July 20, the highest level since May 22 and up roughly 14% over the trailing month. Separately, continued Ukrainian strikes on Russian energy infrastructure have added further pressure on global refined-fuel supply, compounding the effect of the Hormuz disruption on U.S. pump prices.
None of this guarantees prices keep climbing in a straight line — gas prices have swung sharply in both directions several times already this year. But the direction of travel since the EIA's July 7 forecast has been consistently upward, not down, and the specific condition the forecast was built on — a holding ceasefire — is now further from reality than it was when the forecast was published, not closer.
Update, July 21: Above $4, With No Sign of Stopping
The AAA national average closed at $4.019 a gallon on July 21, up from $4.003 the day before, $3.859 a week earlier, and $3.938 a month earlier — the first sustained close above $4 since the ceasefire was originally signed on June 18. The year-ago comparison is stark: $3.141 a gallon, meaning prices are now roughly 28% higher than the same date last year.
The military situation shows no sign of cooling. U.S. Central Command confirmed it carried out another round of strikes against Iran at 9pm ET on July 20, part of what wire reports describe as a tenth consecutive day of strikes. The Pentagon has also confirmed the deaths of U.S. service members in the exchanges, and President Trump has said Tehran "will pay" for the attacks. Iran has continued to intercept commercial vessels transiting the Strait of Hormuz, an Iranian strike reportedly hit a Kuwaiti oil facility over the weekend, and Houthi forces separately announced a new maritime blockade targeting Saudi Arabia — widening the list of chokepoints traders are watching beyond Hormuz alone.
Oil prices reflect that widening risk, but not in a straight line. For what a sustained move above $100 a barrel would do to pump prices and EV running costs, see our breakdown of $100 oil. Brent crude spiked as high as $91 a barrel intraday on July 20 before paring gains to trade in the high $80s after Iran's Foreign Ministry said it had received new proposals from international mediators aimed at reducing tensions. That kind of same-day round trip — a geopolitical risk premium spiking on new strikes, then partially unwinding on any hint of diplomacy — has been the pattern for most of the past two weeks, and it means the crude price on any single morning is a noisy signal.
Update, July 22: New Fronts Open From the Black Sea to the Red Sea
The AAA national average ticked up again to $4.06 a gallon on July 22, up from $4.019 the day before — the pump is now tracking closer to the spring's peak trajectory than the EIA's $3.80 forecast. Wire reports describe an 11th consecutive night of U.S. strikes on Iranian targets, and President Trump has ruled out near-term talks with Tehran while warning of broader strikes ahead.
The conflict's footprint on oil supply is also widening beyond the Persian Gulf. In the Red Sea, Yemen's Iran-aligned Houthi forces have threatened Saudi oil vessels transiting the Bab el-Mandeb Strait and announced a blockade of Saudi Arabia — a separate chokepoint from the Hormuz naval blockade already in effect. In the Black Sea, an attack has hit the Caspian Pipeline Consortium terminal, a key export route for Kazakhstan's crude, while continued Ukrainian strikes on Russian energy facilities keep disrupting refinery operations there as well.
Gasoline supply specifically — not just crude — is also tightening. Refiners in the U.S. and elsewhere have been shifting output toward higher-margin diesel and jet fuel amid the conflict, which reduces gasoline production even before crude availability is factored in. Weekly inventory data for the week ended July 17 show gasoline stockpiles falling again, down roughly 1.4 million barrels. That builds on the drawdown already flagged in this article's July 10 inventory reading, which was itself near a 2012-era seasonal low.
Update, July 23: Saudi Tankers Struck as Gasoline Passes $4.09
AAA's national average rose to $4.09 a gallon on July 23, up 15 cents from $3.94 a week earlier and now averaging $4 or more in most states. AAA attributed the increase directly to rising crude prices tied to continued instability around the Strait of Hormuz.
The conflict widened further overnight. Yemen's Houthi forces said they struck two Saudi oil tankers, the Encelia and the Layla, in the Red Sea using cruise missiles, ballistic missiles, and drones; Saudi state media confirmed the Encelia was hit. The U.S. carried out its 12th consecutive night of strikes on Iran, and Iran retaliated with strikes on targets in Kuwait and Jordan. Iran's Revolutionary Guard Corps navy reiterated that it considers the Strait of Hormuz "completely closed" to tankers for as long as U.S. strikes continue. Oil benchmarks were quoted anywhere from the high-$90s to just above $100 a barrel depending on the source — a reminder of how thin and fast-moving this market has become.
The conflict now touches four separate chokepoints at once — the Strait of Hormuz, the Red Sea/Bab el-Mandeb corridor, the Black Sea, and direct strikes reaching Kuwait and Jordan — rather than the single Hormuz disruption the EIA's July 7 forecast was built around. Nothing in the July 23 developments points toward that $3.80 forecast holding for Q3.
Update, July 25: A Possible Pause, Not Yet a De-escalation
AAA's national average rose again to $4.11 a gallon on July 25, up 11 cents from a week earlier and now roughly 38% above the price at the start of the conflict in late February. That's the twelfth straight day of increases in this cycle.
July 25 also brought the first potentially de-escalatory signal in two weeks: U.S. Central Command did not announce a new round of strikes on Iran, breaking a nightly-strike streak that had run since mid-July. Separately, an Omani delegation visited Tehran on July 25 to discuss "appropriate mechanisms for managing ship traffic through the Strait of Hormuz," according to Iran's state-run IRNA news agency — the kind of diplomatic channel that preceded the original June 18 ceasefire.
Treat this as a data point, not a turning point. This exact cycle — a pause or diplomatic signal followed by renewed strikes — has already played out twice this year, in April and again in June. Gas prices are still climbing on the momentum of the prior two weeks of escalation, and one day without announced strikes doesn't undo that. Watch the next 48–72 hours of AAA data and any follow-up on the Oman-Iran talks before reading this as anything more than a pause.
Update, July 29: The Pause Breaks — Missile Attack, Stalled Hormuz Talks
The pause flagged on July 25 held for only a few days. Reports indicate the Trump administration signaled a pause in further escalation around July 27, and oil prices fell roughly 8% on that news. The calm didn't last: on the evening of July 28 (5:45pm ET), Iran's Islamic Revolutionary Guard Corps fired multiple ballistic missiles at U.S. forces in Jordan in what U.S. Central Command called an "attempted surprise attack." Jordan's military said it intercepted five missiles, and CENTCOM confirmed all were stopped before impact — the first Iranian missile attack on a U.S. base since the pause began. The U.S. and Saudi Arabia responded with strikes on Iran-backed militia sites in eastern Iraq, and President Trump told reporters it was "our turn," pledging heavier retaliation.
Oil markets reacted, though less dramatically than during earlier flare-ups: Brent crude rose about 1% to roughly $83 a barrel and WTI rose about 4% to a similar level, reversing part of Monday's drop but still well below the $84.64–$91 range seen in mid-to-late July. At the pump, AAA's national average actually eased to $4.091 a gallon by July 29 — down from $4.11 on July 25 — reflecting the brief pause that preceded the missile attack; gasoline futures similarly eased to roughly $3.36–$3.37/gal, below the $3.41 peak hit on July 20.
The Strait of Hormuz talks that looked promising on July 25 have also stalled. Iran's deputy foreign minister said Tehran rejected an Omani proposal to split shipping traffic evenly between the two countries' waters, demanding majority control of the inbound route instead, and warned the strait would stay closed to tankers if Oman doesn't accept Iran's terms. CENTCOM says more than 20 U.S. Navy warships are now enforcing what it calls a "steel wall blockade," and had redirected 18 commercial vessels, disabled two, and boarded two as of July 28. Vessel traffic through the Strait remains a fraction of its pre-war pace — roughly 14 crossings in one recent 24-hour period, versus about 120 crossings a day before the conflict began.
Net effect: this is the third pause-then-escalate cycle this article has tracked since the ceasefire first cracked in early July. The retail price dip to $4.091 is real, but it reflects a pause that had already broken down by the time of this update — not a durable turn toward the EIA's original $3.80 forecast.
Update, August 5: Talks Stall Again as Vessels Are Struck Off Oman
A week on from the missile exchange, the picture is stalemate rather than resolution. The memorandum of understanding between Washington and Tehran has collapsed, leaving a second group of vessels stranded inside the Gulf with limited opportunity to exit. President Trump has announced a new round of talks with Iran, a claim Tehran rejects; Qatar says mediators are pursuing a short-term arrangement to bring both sides back to the table.
Shipping remains disrupted. Transits through the strait rose to 84 for the week of July 27 to August 2, up from 45 the week before, with gas carrier and containership traffic resuming after pauses of two weeks and one week respectively. That is still nowhere near the more than 100 vessels a day that crossed before the war, and traffic has slipped back after the brief pick-up. Attacks have not stopped: a cargo vessel was struck by a projectile roughly 20 nautical miles northeast of Khasab, Oman on the evening of August 3, at the same location as an incident the previous day.
At the pump: the AAA national average was $4.080 a gallon on August 5, essentially flat against the $4.091 reading of July 29. For a driver covering 15,000 miles a year in a 28 mpg vehicle, that is roughly $2,186 in annual fuel spending, against about $2,036 at the $3.80 level the EIA had forecast for this stretch of 2026 — a gap of roughly $150 a year, and it is not closing while the strait stays contested.
Update, August 10: Prices Ease as Iran–Oman Talks Near a Deal
AAA's national average was $4.0091 on August 10, down from $4.0121 the day before and from the $4.063 AAA reported in its August 6 weekly update. That is the first sustained decline since the ceasefire cracked in early July, and the average is now within a cent of falling back below $4. AAA headlined that August 6 release on lower crude prices and noted that half of all states were already averaging below $4 a gallon.
The direction changed before the dispute did. Iran said over the weekend that its talks with Oman on a designated shipping route were nearing agreement, but warned that any deal would not mean an immediate reopening of the strait. Tehran also declined direct talks with Washington for now, and is still demanding an end to the U.S. naval blockade, sanctions relief, and compensation for war damage. President Trump, who said on August 5 that the strait would reopen "soon," has since signalled patience. Meanwhile the attacks have not stopped: Houthi forces claimed a strike on Saudi Arabia's Jazan refinery, and a tanker operated by Abu Dhabi National Oil Co. was attacked in Hormuz over the weekend. Shipping analysts at Kpler still count fewer than ten transits a day, against a pre-war level above 100.
Crude tells the same ambivalent story, and which barrel you look at changes it. AAA's August 6 update described crude as trading in the $70 range, citing WTI's settle at $75.22. Brent, the international benchmark the EIA's forecast is written against, posted a weekly loss of more than 7% into August 7 on optimism about the Oman route, then rebounded to $84.18 on August 10 — still roughly 14% above the $74 the EIA assumed for the third quarter. A Brent–WTI spread near $9 is itself a symptom: waterborne crude carries a Hormuz risk premium that landlocked U.S. crude does not.
For a driver covering 15,000 miles a year in a 28 mpg vehicle, $4.0091 works out to about $2,148 a year, roughly $38 less than at the August 5 reading and about $112 above the EIA's $3.80 case. The EIA's next Short-Term Energy Outlook, released on August 11, did revise that figure — see the update below.
Update, August 11: The EIA Moves Its Forecast to Where the Pump Already Is
The Short-Term Energy Outlook this article has been waiting on arrived on August 11, with analysis completed August 6. The EIA raised its third-quarter 2026 retail gasoline forecast from $3.80 to $4.01 a gallon, and its third-quarter Brent assumption from $74.03 to $85.21 a barrel. The agency is explicit about why: it now assumes severe constraints on Strait of Hormuz transits persist through August, and it expects roughly 0.6 million barrels per day of disruption to continue through the end of 2027 even after most regional production recovers in early 2027.
| EIA forecast | July 7 STEO | August 11 STEO | Change |
|---|
| Retail gasoline, Q3 2026 | $3.80/gal | $4.01/gal | +5.5% |
| Retail gasoline, Q4 2026 | $3.39/gal | $3.72/gal | +10.0% |
| Retail gasoline, 2027 average | $3.09/gal | $3.29/gal | +6.5% |
| Brent crude, Q3 2026 | $74.03/bbl | $85.21/bbl | +15.1% |
| Brent crude, 2027 average | $64.76/bbl | $69.39/bbl | +7.1% |
| WTI crude, Q3 2026 | $71.06/bbl | $81.13/bbl | +14.2% |
Source: EIA Short-Term Energy Outlook, Table 2 (Energy Prices) and the agency's current-versus-previous forecast comparison, August 11, 2026.
What this changes about the story. Every update above measured the pump against a $3.80 benchmark and found it short. That benchmark no longer exists. AAA's national average was $4.0116 on August 11, down from $4.0892 a week earlier and up from $3.8824 a month earlier. That puts the pump within two tenths of a cent of the EIA's own revised third-quarter number, rather than 5.6% above the old one. The gap this article has tracked since July did not close because prices came down to the forecast; it closed because the forecast came up to the prices.
What it means for your fuel budget. Using the same driver profile as the rest of this article — 15,000 miles a year at 28 mpg, about 536 gallons:
At the EIA's old $3.80 Q3 case: about $2,036 a year.
At the EIA's revised $4.01 Q3 forecast: about $2,148 a year, or $112 more.
At the actual August 11 price of $4.0116: about $2,149 a year.
At the EIA's Q4 2026 forecast of $3.72: about $1,993 a year — $155 below the Q3 run rate.
At the EIA's 2027 average of $3.29: about $1,763 a year — $385 below the Q3 run rate.
Calculated by GearUp using EIA Short-Term Energy Outlook and AAA data, accessed August 11, 2026. The practical read: the EIA is no longer forecasting a cheap summer, but it is forecasting relief on a delay. Roughly $155 a year comes off the Q3 run rate by the fourth quarter and roughly $385 by 2027 — slower and smaller than the July forecast implied, and resting on the same Hormuz assumption that has broken three times already this year.
Our Take
Treat any gas price forecast as a range rather than a point — but note that the range itself has moved. The EIA's baseline is now $4.01 for the third quarter and $3.72 for the fourth, which replaces both the $3.80 the July forecast promised and the $4.20–$4.56 spring band this article previously leaned toward. The pump is sitting almost exactly on that revised baseline. Public fast charging, by contrast, still has not moved: AAA's national average was 42.4 cents per kWh on August 11, effectively unchanged from the 42 cents in its August 6 weekly update — the same stability gap that has held all summer. The budgeting question has changed shape. Through July it was whether the pump would fall back to a forecast; now the forecast has come up to the pump, and the relief the EIA projects arrives in the fourth quarter and 2027 rather than this August. Budget for roughly $4 a gallon through September and treat anything below that as upside, not as the plan.
What This Means for Your Driving Budget
For a driver covering 1,200 miles a month in a 30-mpg gas vehicle, the difference between $3.80 and $4.50 a gallon works out to roughly $28 more per month, or about $340 a year. That's not catastrophic on its own, but it compounds with everything else that's gotten more expensive this year—financing costs, insurance, and the now-expired federal home charger tax credit among them. That upper bound is a scenario worth keeping in view rather than a forecast. Brent was trading at $84.18 on August 10 — well above the $74 the EIA assumed for the third quarter, but far below the $120 area that preceded the spring's $4.56 peak.
It's also a reminder of the core trade-off between gas, hybrid, and electric ownership: gas prices can move 15-20% in a matter of weeks based on events an individual driver has zero control over, while home electricity rates move far more slowly and predictably. That doesn't make an EV or hybrid automatically cheaper overall—purchase price, insurance, and access to home charging still matter—but it does mean the fuel-cost side of the ledger is inherently more volatile for gas vehicles right now than it has been in years.
For a deeper look at how that volatility gap has played out this year, see Gas Prices Swung 53% in 10 Weeks. Your EV Charging Bill Didn't Move. For the full ownership-cost comparison across gas, hybrid, and EV, see Electric vs. Gasoline: The Complete 2026 Total Cost of Ownership Analysis.
What to Watch Next
- Whether the naval blockade holds or is challenged. The IMO has already objected to the transit toll on legal grounds; how shipping insurers and international carriers respond to the blockade itself will shape how much Gulf oil actually reaches market.
- The EIA's next Short-Term Energy Outlook, due September 9, 2026. The August 11 edition raised the Q3 2026 gasoline forecast to $4.01 and the Q3 Brent assumption to $85.21; the September edition will show whether the agency's assumption that Hormuz constraints ease after August survives contact with events.
- AAA's weekly national average, which is the fastest-moving real-world signal of how much of the crude and futures spike has reached the pump.
- Gasoline inventory levels, already 14 million barrels below the five-year average as of July 10—a tighter starting point than the market had heading into the July 7-8 escalation.
Our Take
Forecasts are built on assumptions, and the honest version of this story is that the assumption broke before the ink on the forecast was dry—and then kept breaking. That's not a knock on the EIA—nobody can price in a ceasefire holding, failing, and then escalating into a naval blockade within the same month. It's a reason to hold summer gas-price predictions loosely and check back often, especially if you're deciding right now between a gas car, a hybrid, and an EV based on how much you expect to pay at the pump in August.
Sources
- U.S. Energy Information Administration, Short-Term Energy Outlook, July 7, 2026 — eia.gov/outlooks/steo
- U.S. Energy Information Administration, Short-Term Energy Outlook, August 11, 2026 — Table 2 (Energy Prices) and current/previous forecast comparison — eia.gov/outlooks/steo
- AAA, national average fuel prices and EV charging prices, accessed August 11, 2026 — gasprices.aaa.com
- U.S. Energy Information Administration, Weekly Petroleum Status Report, week ending July 10, 2026 — eia.gov/petroleum/weekly
- AAA Newsroom, "Gas Prices Reverse Course and Start Rising Again," July 9, 2026 — gasprices.aaa.com
- AAA daily and state gas price averages — gasprices.aaa.com
- International Energy Agency, Oil Market Report, July 2026 — iea.org
- International Maritime Organization statement on Strait of Hormuz transit measures, July 2026 — imo.org
- Trading Economics, gasoline futures pricing and commodity market commentary, accessed July 22, 2026 — tradingeconomics.com
- Fox Business, "AAA National Average for Regular Gas Passes $4 Again Amid Iran War," July 21, 2026 — foxbusiness.com
- The Associated Press, via PBS NewsHour, "Yemen's Houthis attack Saudi tankers in the Red Sea," July 23, 2026 — pbs.org
- AAA Newsroom, "Gas Prices Keep Climbing, National Average Jumps 15 Cents," July 23, 2026 — gasprices.aaa.com
- CNN, "US intercepts 'surprise attack' by Iran on US forces in the Middle East," July 28-29, 2026 — cnn.com
- Axios, "Iran launches missiles at U.S. base for first time since Trump paused strikes," July 28, 2026 — axios.com
This article is for educational purposes only and is not financial advice. Prices and forecasts referenced are current as of August 11, 2026, and will change as the underlying situation develops.