Gasoline and oil prices are showing the first signs of a slow decline after weeks of sharp increases tied to the war with Iran and the closure of the Strait of Hormuz.
Crude oil prices fell sharply Monday as the U.S. and Iran showed signs of progress toward an agreement that could end the three-month war and reopen the strait, a key shipping route for global energy supplies.
International benchmark Brent crude futures fell about 7% to close at $96.14 a barrel. West Texas Intermediate crude, the U.S. benchmark, dropped more than 6% to $90.30 a barrel.
President Donald Trump said Monday that negotiations with Iran were 鈥減roceeding nicely,鈥� while cautioning the U.S. could return to military action if talks break down.
AAA said Monday the national average price for unleaded regular gasoline dipped only by one penny to $4.50 a gallon.
Oil industry analyst Phil Flynn, with Price Futures Group in Chicago, said he is cautiously optimistic the worst of the recent gasoline price spike may be over.
鈥淚鈥檓 hopeful that the Memorial Day weekend might have been the peak,鈥� Flynn said. 鈥淚鈥檓 optimistic that the worst of the price spikes may be behind us. There are two holidays where gasoline prices traditionally peak during the year. It鈥檚 either Memorial Day or the Fourth of July.鈥�
Flynn said the U.S. is in a stronger position than parts of Europe and Asia, where fuel shortages have become a concern. U.S. oil production is near record levels at about 13.5 million barrels a day, while refineries are operating at roughly 92% capacity.
He said U.S. producers have helped stabilize global markets by exporting record amounts of gasoline.
鈥淭he only reason other parts of the world are not really shutting down their economies is because of U.S. producers,鈥� Flynn said. 鈥淭he amazing thing is that with this price spike, demand has stayed strong.鈥�
Flynn said the key question now is whether diplomacy succeeds and shipping resumes through the Strait of Hormuz.
鈥淚f we indeed reopen the Strait of Hormuz, we may have paid the highest price of the summer and prices will eventually go back down,鈥� Flynn said. 鈥淪upplies are more than adequate. Our refineries are refining at an incredible rate. A lot is going to depend on the ceasefire.鈥�
Higher fuel prices do not appear to be slowing travel demand. AAA forecast more than 39 million people will travel by car over the Memorial Day weekend, slightly above the record set in 2025.
The U.S. Travel Association expects travel spending to grow 1% this year, driven in part by domestic leisure travel, even as the FIFA World Cup draws international visitors to the U.S.
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