U.S. average gasoline price slips below $4 per gallon

The U.S. average price for a gallon of regular gasoline fell to $3.999 on Thursday, according to the American Automobile Association, marking the first dip below the $4 threshold since March 30. Indiana posted the lowest state average at $3.40, and 28 states now report prices under $4, while tracking service GasBuddy recorded a similar level of about $3.98 earlier in the day.

The decline follows the anticipated reopening of the Strait of Hormuz, a key shipping lane that was closed in late February and had restricted roughly 20% of global oil supplies. Prices have been trending downward since a peak of $4.56 on May 21, driven by expectations that oil flows would resume.

Analysts caution that a return to pre-conflict price levels around $3 per gallon is unlikely in the near term. Matt Smith, lead oil analyst at Kpler, said it could take three to four months for tanker traffic to normalize through the strait, and longer to replenish inventories lost during the shutdown. Damage to regional production and refining facilities also slows the recovery.

Global crude markets remain influential for U.S. pump prices, and while the immediate price drop is modest—averaging a 2-cent daily decline since the peak—experts note that the earlier surge of more than $1 per gallon was the largest one-month increase of the century.

"There’s an old expression – gas prices go up like a rocket and come down like a feather," said Tom Kloza, an independent oil analyst.

With world oil inventories now near their lowest in decades, some forecasters warn that gasoline prices could rise above $4 again later in the summer as demand increases. Dan Pickering, founder and chief investment officer at Pickering Energy Partners, added that the market will settle at a new normal, but it is unlikely to return to $2.85 per gallon.

The report also notes that gas station owners have been reluctant to cut prices quickly, having absorbed lower margins during the price surge.