Americans can expect a relief measure forbecause oil drops below $ 100 a barrel, analysts have said.
Benchmark US crude rose 49 cents to $ 96.93 a barrel on Wednesday. down from around $ 130 a barrel last week, the highest level since 2008. According to investment bank UBS, oil prices are falling as leaders of Russia and Ukraine discuss a possible ceasefire.
“The move reflects the easing of fears of further supply disruptions based on the ceasefire talks between Russia and Ukraine,” UBS analysts said in a report. “There were also indications that, as energy companies in Europe continue to avoid Russian oil, India has bought discounted Russian crude, potentially mitigating the blow to global supply from import bans in the US, UK and in Canada “.
Nationwide, a gallon of regular gas costs $ 4.30 on average, up sharply from $ 3.51 in February and $ 2.87 a year ago, according to AAA. Drivers in some states, including Alaska and California, pay up to $ 4.73 and $ 5.77, respectively. The higher prices have further strained the portfolios of US households who are already struggling with rising inflation.
But gas prices are now down slightly in several US cities and the decline is expected to appear at more gas stations across the US soon, according to Patrick De Haan, head of oil analysis at GasBuddy.
“It’s just time to get back below the $ 4 / gal average as long as these levels hold up.” Hey tweetedwhile noting that another surge in oil prices would raise fuel costs.
For the most part, oil prices are in step with gas prices: as oil rises, pump prices also rise.
“It is worth mentioning that the cost of oil represents about 50 percent of what drivers pay at the pump,” AAA spokesman Andrew Gross said in a statement Monday. “This war is shaking an already tight global oil market and making it difficult to determine whether we are close to the peak for pump prices, or whether they continue to rise. It all depends on the direction of oil prices.”
Gas prices dropped to an average of $ 1.94 per gallon in April 2020 as ofthe pandemic was taking hold. But fuel costs began to rise sharply in the fall of that year as the US economy rebounded and demand increased. By December 2021, gas had jumped to $ 3.40, as the most ferocious inflation of the past four decades pushed up the cost of everything from food to rent.
This year, oil and gas costs have continued to rise after Russia amassed troops on the Ukrainian border. Prices exploded higher after Russia launched a major invasion on Feb.24 amid fears the conflict could disrupt global crude supplies and trigger economic sanctions.
Prices rose further last week after the US announced a. Russia is a , accounting for about 12% of the world supply. Any disruption to such exports is likely to lead to higher gas prices for consumers almost everywhere.
Despite the pain at the pump, a recent CBS News poll found that 63% of Americans said they support the Biden administration’s sanctions against Russia, including a ban on Russian oil, even if it means that the prices of the gas must rise.