President Trump claims US oil prices are falling during G7 remarks
President Trump said in his remarks at the G7 summit that oil and gas prices are currently falling.
Gas and oil prices fell on June 18, the morning after U.S. and Iranian officials signed a memorandum of understanding aimed at ending the war between the two countries. This was a welcome development for Americans preparing for summer travel after facing rising costs at the pump over the past three months as a result of the conflict.
The national average for a gallon of regular gasoline is $3.99, down from $4.52 last month but still up from $3.19 this time last year, according to AAA. Brent crude oil, the world standard, fell below $78 per barrel, the lowest price since early March. The war began on February 28th.
President Donald Trump said in remarks at the G7 summit that “all kinds of things are going to happen now that oil prices are coming down.” “Everything follows the cost of energy.”
But analysts say it will take time for shipping through the Strait of Hormuz, which typically carries 20% of the world’s oil supplies, to return to pre-war levels.
Will gasoline prices continue to fall?
Patrick de Haan, GasBuddy’s head of oil analysis, said in an X post on the evening of June 17 that he has been tracking oil’s ups and downs for 100 days and is hopeful that “oil flows are slowly returning to normal” and that “the worst is behind us.”
In a separate post, he said he expects the national average gas price to trend toward $3.70 a gallon and could fall below $3 a gallon later this year “if all goes well.”
That’s good news for 67.2 million Americans. The AAA project will cover at least 50 miles by car or plane for the trip to celebrate Independence Day. According to a Lending Tree survey released June 15, 75% of Americans said rising gas and airfare prices have already affected their summer travel plans.
But Americans are feeling a little more hopeful. The University of Michigan’s Consumer Sentiment Index rose 9.2% this month after hitting an all-time low in May. Although still down 19.4% for the year, Director of Consumer Research Joan Hsu said in a statement that the jump in sentiment in June was thanks to consumers experiencing some relief at the gas pump.
“With the memorandum in place, prices are coming down from their highs because it looks like the Strait of Hormuz will open sooner than it would have otherwise,” said Wayne Winegarden, a senior economics fellow at the Pacific Institute. “Now we’re out of where we were, but I think it’s really important to realize that it’s not the same as going back to where we were in January.”
Expect “bumps in the road”
Analysts at Oxford Economics said in a June 15 research note that the U.S.-Iran deal is an “important step” but that “challenges are expected ahead and it will still be some time before shipping in the Strait of Hormuz approaches pre-war levels.”
President Trump promised on June 17 to immediately open the strait, but shippers still face several challenges, including high insurance premiums and uncertainty about whether they can safely navigate the mine-laden seaway.
“How wide the strait is is still an open debate, and it will probably take several more weeks to confirm that that’s not the issue,” said Mike Scordeles, head of U.S. economics at Trust, adding that a key indicator will be whether Chinese ships manage to get through the strait. “I’m not saying the U.S. Navy is going to take more chances, but they’re not as concerned about it as China’s Plain Jane oil tankers, and they’re more sophisticated. That oil tanker with 2 million gallons of crude oil is not going to take any chances, so they’re going to be very cautious.”
Supply chains will not return to normal anytime soon. Companies that paid more for oil in the past few months are still working to clear their high-cost inventories and are likely to continue passing some of that cost on to consumers, even if oil prices are currently lower. Skorderes said he wouldn’t be surprised if inflation remained slightly elevated in June, July, August and possibly September.
Weingarten said that even if inflation were to ease, that would not solve the affordability problem for Americans.
He added: “Prices will still be above where they were at the beginning of the year. So there’s such a discrepancy in terms of what the economic news tells you, but I think it’s really important to be aware of how people feel.”
Contact Rachel Barber at rbarber@usatoday.com, follow her at X @rachelbarber_ and subscribe to her newsletter Making More of Your Money here.
