US-Iran Talks Push Gas to $4.10 a Gallon as Oil Slides 20% From May Peak

Q: With Mideast tensions and low oil reserves, is this gas price drop just temporary relief?

Yes. The recent drop to about $4.12 a gallon looks more like short-term relief than a durable turn lower. The immediate reason prices have eased is that crude has stayed below $100 a barrel, with WTI settling near $90, and U.S. gasoline production and supply both ticking up. Retail prices also tend to lag wholesale moves by several weeks, so the recent decline reflects some earlier softening in oil markets. But the risks still point upward. The biggest is the Middle East, especially uncertainty around the Strait of Hormuz, a chokepoint for more than one-fifth of global oil flows. Any renewed disruption there can quickly push crude and gasoline higher. Analysts and central bank officials have repeatedly warned that if the conflict drags on, oil could remain elevated for months and keep pressure on inflation. Inventories are another concern. U.S. crude stocks just fell by 7.2 million barrels and are now about 5% below the five-year average, leaving less cushion if supply is hit. Broader market buffers are also thinner than normal, which makes prices more sensitive to shocks. That does not mean a spike is inevitable. Weaker demand in parts of the global economy, including China, and strong U.S. production can help cap prices. The U.S. is also producing and exporting large volumes of energy, which offers some protection. Still, with summer demand rising and geopolitical risk unresolved, the current decline is best seen as a reprieve, not a clear all-clear.

3 articles · Updated · abcnews.com · Jun 13

$4.10 a gallon is the U.S. average gas price, down 40 cents, or 8.8%, in a month and nearing a drop below $4.
About $84 a barrel is where U.S. oil traded Friday, roughly 20% below its May 19 peak, as Washington and Tehran moved closer to a deal to reopen the Strait of Hormuz.
Analysts said sub-$4 gasoline could arrive within days, but warned the relief may not last because global oil supplies remain tight and any renewed Middle East tensions could quickly lift crude again.
Gasoline still costs $1.12 more than before the Iran war, and pump prices may fall more slowly than oil because retailers are working through higher-cost inventory.