Gasoline drops below an important psychological threshold in the US. Why drivers should not celebrate too early
The average price of gasoline in the United States has fallen below $4 per gallon for the first time in nearly three months, amid optimism about the reopening of the Strait of Hormuz, CNN reports.
The national average price of regular gasoline in the United States reached $3.999 per gallon on Thursday, according to data published by AAA. This is the first time since March 30 that the national average has fallen below the symbolic $4 threshold. The decline comes after nearly a month of continuous price drops, CNN writes. On May 21, the average price had peaked at $4.56 per gallon, amid fears generated by the conflict between Iran and the US and the blocking of traffic through the Strait of Hormuz.
Currently, 28 US states have average prices below $4 per gallon. Indiana records the lowest level, at approximately $3.40.
Reopening of the Strait of Hormuz calms markets
The oil market reacted positively after announcements regarding the preliminary agreement between Washington and Tehran, which is expected to allow the resumption of traffic through the Strait of Hormuz. The sea route is one of the most important in the world for the transport of oil and liquefied natural gas. Its closure at the end of February affected approximately 20% of global oil supply and triggered a surge in energy prices. As investors began to believe that traffic would resume, oil prices entered a downward trend, and the effects began to be seen at the pump.
Return to normal will take months
Industry experts warn that the reopening of the strait does not mean an immediate return to the pre-war situation. Numerous oil tankers have remained stranded in the Gulf, and some production and refining facilities in the region have been affected by the conflict. The resumption of normal supply flows could take between three and four months, analysts estimate. In addition, global oil inventories have been severely affected during the crisis and will need time to be rebuilt.
Why fuel prices drop more slowly than they rise
Analysts recall an old principle of the oil market: prices rise "like a rocket" and fall "like a feather." In the first weeks of the conflict, gasoline rose by more than a dollar per gallon, the largest monthly increase recorded this century. In contrast, after reaching the May peak, prices have fallen by an average of only a few cents per day. Gas station owners are also trying to recover some of the losses suffered during the period when they absorbed part of the cost increases to remain competitive.
Prices could rise again this summer
Even if the current trend is downward, experts do not rule out new increases in the coming months. Global oil inventories are at some of the lowest levels in decades, and the summer season traditionally brings an increase in fuel consumption in the United States. Under these conditions, analysts believe that prices could return above the $4 per gallon threshold before the end of summer. Although the market is trying to find a new balance after the conflict in the Middle East, experts say that a return to levels around $3 per gallon, seen before the war, is unlikely in the near future.
