Oil prices dip amid optimism over potential US-Iran deal

Oil prices decreased early Monday amid negotiations between the Trump administration and Iran on reopening the Strait of Hormuz and ending the Middle East conflict.

West Texas Intermediate crude futures, the benchmark for North American markets, dipped by more than 6.1 percent to $90.68 as of early Monday. Brent crude futures, the global benchmark, dropped by 6.1 percent to $97.22. 

That translated to a slight decrease at the pump in the U.S. The average per-gallon price of a gallon of regular gas was more than $4.50 on Monday, a decrease of less than one cent from Sunday and less than a cent lower than a week ago, according to AAA. 

AAA also reported that the price of diesel fuel has decreased by more than three cents from a week ago, to less than $5.60.

Despite the higher gas prices, AAA projected last week that more than 39 million Americans will travel by car for Memorial Day weekend, a new record.

“Memorial Day travel is still reaching record levels, but with the smallest year-over-year increase in more than a decade,” Tiffany Wright, a spokesperson for AAA’s The Auto Club Group, wrote. Although travel demand remains strong, higher fuel prices and persistent inflation may cause some travelers to shorten trips, delay plans, or stay closer to home.”

Multiple reports Sunday indicated that officials in Washington and Tehran were discussing the terms of an agreement to end hostilities. CBS News’s Jennifer Jacobs reported that under the deal, the U.S. would lift its naval blockade of Iranian ports in exchange for the Islamic Republic disposing of its highly enriched uranium.

The U.S. Navy began blockading Iranian ports last month in response to the Iranian military restricting shipping in the Strait of Hormuz — a key channel that transports nearly a fifth of the world’s oil supply. That initial move shocked the global energy industry, with gas prices in the U.S. rising sharply from less than $3 in the days before American and Israeli forces launched strikes on Iran.

U.S. Central Command said Saturday that under the blockade, the administration had redirected 100 ships in the strait.

Trump on Monday predicted that a deal between his administration and Iran “will either be a great or meaningful one, or there will be no deal.”

Patrick De Haan, the head of petroleum analysis at Gas Buddy, also wrote on social media Sunday that “until we see an agreement signed & a significant amount of ships transit through the Strait” the national average price of gas “will likely remain well above” $4 per gallon. 

Over the last 24 hours, just two ships have passed through the waterway — down from the normal pre-war average of 60 ships transiting per day — according to hormuzstraitmonitor.com. 

“Only once we start seeing confidence and ships move will prices plummet,” De Haan added.