Prices at the pump may begin to drop, easing the tensions for many Americans as average prices reached more than $4.30 per gallon in recent weeks.
Oil dropped 6% Tuesday to $96.84 per barrel, down from roughly $130 a barrel last week when prices set a record as the highest level since 2008. According to investment bank UBS, oil prices are falling as Russia and Ukraine leaders reportedly discuss a possible ceasefire.
“The move reflects easing fears of further supply disruptions based on ceasefire talks between Russia and Ukraine,” UBS said in its report. “There were also indications that, while energy companies in Europe continue to avoid Russian oil, India has bought discounted Russian crude, potentially mitigating the hit to global supply from import bans in the U.S., U.K. and Canada.”
According to Patrick De Haan, head of petroleum analysis at GasBuddy, gas prices are now declining slightly around the U.S.
“It’s only time before we sink back under $4/gal average as long as these levels hold.” he posted on Twitter.
Oil collapsing again this morning:
WTI $94, down $8
RBOB down 22c/gal
It’s only time before we sink back under $4/gal average as long as these levels hold.
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) March 15, 2022
Americans have been paying $4.32 a gallon for the past two weeks. This is up 84 cents from only a month ago, according to GasBuddy.
According to AAA, some states, including Alaska and California, are paying as much as $4.73 and $5.75 per gallon, respectively.
Prices began to surge after Russia invaded Ukraine on Feb. 24, sparking concerns that the conflict would disrupt global crude supplies.
Prices rose further last week after the U.S. announced a ban on Russian oil imports. Russia is a significant exporter of crude oil, accounting for about 8% of the nation’s supply.
Gas prices were already high before the war in Ukraine and were causing political problems for President Biden and the White House. Inflation has impacted almost every sector of American life.
If the international supply of crude oil experiences a further disruption, the lower prices may only be temporary.
“If the supply tightness does not ebb, oil may exceed way above its record high,” said Howie Lee, an economist at Singapore’s OCBC bank.
“In the worst-case scenario of a complete sanction on Russia’s energy exports, I won’t be surprised to see Brent trading above $200,” he added.