Gas prices Thursday fell below $4 per gallon for the first time since March, bringing consumers some relief, after more than three months of elevated prices as a result of the Iran war.
Prices have sharply dropped from $4.56, this year’s peak. As of Friday morning, the average price per gallon in the United States fell to $3.999, according to motor club AAA data tracked by NBC News.
Still, even at that level, prices are more than 34% higher than before the U.S. and Israel launched the war Feb. 28.
The drop in retail gas prices is thanks to tumbling oil prices, which have plunged more than 15% over the last two weeks as markets became more optimistic about peace with Iran. While oil is still more than 30% higher than it was before the war started, on Thursday it fell to its lowest levels since the conflict started.
U.S. crude oil closed Thursday at $76.60 per barrel and posted its biggest weekly drop since April. International Brent crude oil closed at $79.85 per barrel. Oil markets are closed Friday for Juneteenth.
Experts are cautious about how much further prices can fall. Backup supplies in commercial and government stockpiles have mitigated higher prices, but those are now at critically low levels.
The key commercial oil hub in Cushing, Oklahoma, reached “operational stress” level Thursday, while the U.S. government’s Strategic Petroleum Reserve fell to its lowest level since 1983 on Monday.
While the U.S. and Iran have signed and published the text of a memorandum of understanding to halt the war, a fuller agreement is contingent on a 60-day negotiating period. Additionally, the Strait of Hormuz — where previously more than 20% of the world’s energy supplies passed to reach global markets — remains effectively shut.
On Friday, Chevron CEO Mike Wirth said, “The real question is how much longer can these measures kind of ameliorate the risk.”
“At some point, they may not be able to,” he added.
Asked when he thought that might be, Wirth said in an interview with Bloomberg that it was “probably” in the July or August time frame.
