Diplomacy between the U.S. and Iran has translated into relief at the pump for Americans, data showed on Monday, with gasoline prices falling for a sixth straight week and marking a 15% drop from their May peak.
The national average price of gasoline fell 14.1 cents a gallon over the last week to $3.85 per gallon on Monday, according to price-tracking service GasBuddy.
Prices declined in most states. Gasoline dropped 25 cents per gallon in Colorado over the past week, 22 cents in Arizona and 21 cents in Ohio, GasBuddy data showed. The drop may ease pressure on U.S. President Donald Trump and fellow Republicans. They are battling to hold narrow majorities in Congress in November’s midterm elections and have been hit with consumer criticism over high prices.
StoneX analyst Alex Hodes said the price decrease should ease inflation. However, expectations that the flow of energy through the Strait of Hormuz off Iran will return to normal are a “large assumption” and there will potentially be setbacks in the months to come, Hodes said.
SUPPLY RISKS PERSIST
Two smaller crude tankers sailed through the Strait of Hormuz on Monday although Iran said it had again closed the waterway over the weekend. However, transits through the strait remain well below levels seen before the conflict started in late February.
Gasoline prices are not at significant risk of a spike, as some vessels continue to move through the strait, said Patrick De Haan, head of petroleum analysis at GasBuddy.
But if relations between the U.S. and Iran deteriorate, that could quickly change, he added.
Tightening supplies from refinery outages and the approaching Atlantic hurricane season could also reverse recent price declines. TotalEnergies’ shut down its 238,000 barrel-per-day refinery in Port Arthur, Texas, last week when a lightning strike knocked out power. A full restart is expected to complete within seven days. On Sunday, a fire broke out at Marathon Petroleum’s 631,000-barrel-per-day Galveston Bay Refinery in Texas City, Texas.
(Reporting by Nicole Jao in New York; Editing by Cynthia Osterman)