For the first time in nearly two months, Americans will see gasoline prices below $4 per gallon. The decline was made possible by the U.S. and Iran agreeing to reopen the Strait of Hormuz. The White House considers this Donald Trump's achievement, but analysts point out that the global oil market is still far from a sustainable recovery.

The decline has been going on for a third week in a row now. Since May 21, the average price of fuel across the country has fallen from $4.56 to $4.12, and the price of oil has dropped below $100 per barrel.

The agreement with Iran pushed prices below $4, but gasoline is still 28% more expensive than a year ago — back then Americans paid $3.13 per gallon in the U.S.

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Gasoline prices are falling after the deal with Iran

The agreement concerns the Strait of Hormuz — about a fifth of all the world's oil usually passes through this waterway. The international benchmark Brent fell 5% on June 15 to $83.13, down roughly 30% from its March peak ($119.50 per barrel).

The White House noted that tanker traffic should rise in the coming days — to about 50 vessels per day versus 25 now. Before the war, around 130 ships passed through the strait per day.

A win for Trump and risks for the market

According to the U.S. Energy Information Administration, the strategic oil reserve has fallen to its lowest level since 1983. There is virtually no stockpile left in the market in case of a new shock.

Rapidan Energy president and former adviser to the White House under George W. Bush, Bob McNally, warned: the market will still need to replenish its historic cushion of 1.5 billion barrels of reserves — this process will drag on for many weeks and months.

Source: BeInCrypto