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The tenuous cease-fire between the United States and Iran has helped to bring down gas prices from their highest levels since 2022. The national average price of regular unleaded is now $3.86 per gallon, off its peak of about $4.50 hit earlier this spring, when the war mostly closed the Persian Gulf to shipping and cut off much of the region’s vast exports of crude oil and refined fuels.
It’s still not clear whether the cease-fire can hold or lead to a lasting peace agreement. Repeated flare-ups of violence have strained the deal and spooked tanker ships into refraining from trying to pass through the narrow Strait of Hormuz to bring their cargoes to market. Oil prices remain well below their wartime peaks, but if the conflict flares up, they could spike all over again. For now, we look for benchmark West Texas Intermediate crude to trade from $70 to $75 per barrel if the cease-fire holds.
Gas prices should slip further if oil prices remain at their present level. Heading into the busy July 4 holiday weekend, look for the national average price of gas to dip to about $3.80. Diesel, now averaging $4.86 per gallon, should continue to drop fairly swiftly if the situation in the Middle East remains stable. That would be good for trucking companies and, ultimately, consumers, since almost all consumer goods travel on trucks at some point in their journey to customers.
Natural gas futures prices remain fairly muted, with the benchmark futures contract recently trading at $3.19 per million British thermal units (MMBtu). A heat wave forecast to grip much of the United States around the upcoming holiday promises to cause a major jump in gas consumption, as gas-fired power plants run at full capacity to deliver enough electricity to keep air conditioners running. But if the heat wave lasts only a few days, as it is presently forecast to do, that should not lead to a sustained rise in gas consumption, or in gas prices. Barring an extended period of high heat, we expect gas futures to trade at or a bit above $3 per MMBtu this summer.
