falling oil price plummeted early this week following growing optimism that the ceasefire between Israel and Iran would hold, reducing the threat of further disruption to global energy markets. On Monday, Brent crude — the international oil benchmark — dropped 7% to settle at $70.65 per barrel. This marked a reversal from recent price spikes, which had briefly seen Brent futures surge past $80 after U.S. airstrikes in Iran heightened fears of a regional conflict.
Gasoline futures followed suit, with New York Harbor wholesale prices falling 5% on Monday to $2.22 a gallon. By midday Tuesday, they dropped further to $2.09 — matching the levels seen on June 10, before the recent tensions began. However, this significant drop in futures is not yet being mirrored at the consumer level, where pump prices remain relatively unchanged.
Consumers Unlikely to See Immediate Relief at Gas Stations Despite Falling Oil Price
Despite falling oil price and wholesale gasoline prices, U.S. drivers are unlikely to experience immediate savings at the pump. According to AAA, the average price for regular gasoline stood at $3.22 on Monday and remained the same on Tuesday, only a modest 3% increase from the $3.12 price recorded on June 10.
Industry expert Tom Kloza notes that because retail prices never rose dramatically during the recent geopolitical flare-up, there’s limited room for a sharp drop now that tensions are easing. While some decline could occur in the coming days as gas stations receive cheaper wholesale deliveries, other seasonal factors could dampen the extent of any price relief.
Kloza points to the annual summer driving surge as a key factor likely to prevent a significant fall in pump prices over the next several weeks. Still, he expects downward pressure to resume once peak July demand subsides, especially given robust oil supplies and efficient U.S. refining operations.
Strong Supply and Market Trends May Lower Prices Later This Year
Looking ahead, broader market conditions suggest the possibility of more noticeable declines in gasoline prices later in the year. Kloza highlights a strong global oil supply and ample U.S. refining capacity as indicators of a potentially bearish outlook for energy prices, assuming no new geopolitical shocks occur.
Interestingly, current oil market trends are not significantly driven by speculative investment, unlike during past crises such as Russia’s invasion of Ukraine in 2022, which saw falling oil price jump 44% in just two months. Today, investors appear more inclined to funnel their capital into assets like cryptocurrencies and tech stocks, reducing the volatility once common in oil futures markets.
Kloza also dismissed suggestions that current supply levels are the result of former President Donald Trump’s push to expand U.S. production. He noted that domestic output has remained largely flat over the past year, in part due to high costs linked to tariffs on imported steel, a key material in oil infrastructure.
In sum, while the oil market appears well-supplied and prices have retreated, drivers may need to wait a bit longer before seeing meaningful relief at the gas pump.
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