U.S. gas prices extend three-week decline as oil eases, but pump costs remain elevated
Fuel costs are easing during the summer travel season as the national average price of regular gasoline continues to decline after a sharp spring surge. Even with the recent pullback, drivers are still paying markedly more than before the U.S.-Iran war disrupted global oil flows.
Highlights
- AAA reports U.S. national average gasoline price fell to $4.06 per gallon Monday, down 1.5% from Friday and well below May's $4.56 peak.
- Brent crude has dropped from nearly $120 per barrel in late April to about $83 after news of a tentative deal to reopen the Strait of Hormuz.
- Despite declines, average U.S. gasoline prices remain over 33% higher than pre-war levels, with California still averaging $5.74 per gallon.
AAA data shows continued drop in pump prices
As reported by AAA, the national average price for a gallon of regular gasoline has been falling for three straight weeks, offering some relief to motorists during a busy period for road travel.AAA said in a statement on Friday that the nationwide average stood at $4.12 per gallon, down from a May peak of $4.56. By Monday morning, that average had fallen another 1.5% to $4.06, according to the group's data.
Oil market volatility keeps prices above pre-conflict levels
Gasoline prices climbed from less than $3 in February after the start of the U.S.-Iran war, which disrupted global oil supply through the closure of the Strait of Hormuz, a key waterway for roughly 20% of the world's oil and liquefied natural gas flows.Since then, crude prices have risen on escalations in the conflict and retreated on signs of a possible settlement or reopening of the strait. On Monday, oil prices fell 5% after news of a tentative deal to reopen the passage, while Iranian officials said the conflict would end on Monday night.
Brent crude, the international benchmark, has dropped from nearly $120 a barrel in late April to about $83 as of 6 a.m. ET Monday. Even so, gasoline remains more than a third more expensive than it was before the conflict began, and prices in some states are still above $5 per gallon, including California at an average of $5.74.
Our earlier report on the preliminary U.S.-Iran deal to reopen the Strait of Hormuz explained how a proposed timeline for restoring shipping could ease fears of further supply disruptions. We also noted that oil prices fell on the headline, even as key details remained unresolved and both sides offered differing interpretations ahead of follow-up negotiations.
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