Gas prices edge toward $4 a gallon as ‘real test’ shifts to Hormuz reopening

Gasoline prices dropped toward the $4 per gallon threshold on Tuesday as oil futures briefly dropped below $80 for the first time since March.

The national average at the pump dropped to $4.04 per gallon, according to AAA data. Prices dropped $0.13 from a week ago, and $0.47 from one month ago.

At least 24 states have already seen average prices fall below $4 per gallon, including much of the Midwest and Great Lakes region, as well as the South.

The decline is a welcome relief for drivers who just last month saw gasoline prices hover roughly 40% higher from a year ago.

The drop follows the announcement of a US-Iran truce agreement, which includes the reopening of the Strait of Hormuz, the critical oil transit route that has been at a near standstill since the start of the Middle East conflict. The agreement is expected to be formally signed this Friday.

“The real test now shifts to the Strait of Hormuz, where any reopening and resumption of normal oil flows would be the clearest signal that this relief is durable,” said Patrick De Haan, head of petroleum analysis at GasBuddy, on Monday.

Brent crude oil (BZ=F) fell more than 3% on Tuesday to hover near the $80 threshold, while WTI crude (CL=F) crossed below $77. Despite the sharp decline, it will take a few weeks before a meaningful national average decline at the pump across the country.

“Retail gasoline just doesn’t move that fast, $3.75/gal maybe by July 4th weekend,” wrote Tom Kloza chief oil analyst at Gulf Oil on X on Tuesday.