MW Fourth of July gas prices may be the lowest in years. Will they stay this cheap all summer?

By Myra P. Saefong

Easing Israel-Iran tensions helped pull oil prices down by nearly 9% in the second quarter

U.S. drivers may pay the lowest Independence Day prices for gasoline at the pump since 2021, as easing Israel-Iran tensions have helped pull oil lower. But whether cheaper fuel prices will stick around for the rest of the summer is a bit harder to predict.

Heightened production from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), along with trade-policy concerns, have muted the "typical springtime rise in prices," said Patrick De Haan, head of petroleum analysis at GasBuddy.

"We've finally seen the market cool after years of imbalances" driven by OPEC+ production cuts, Russia's war on Ukraine and the COVID-19 pandemic, De Haan told MarketWatch, adding that this summer "finally feels normal."

On Tuesday, the average price for regular unleaded was at $3.155 a gallon, according to GasBuddy. That's up 6.2 cents a gallon from a month ago, but down 34 cents from a year ago.

On Monday, GasBuddy reported the first weekly fall in the national average for gasoline prices in three weeks. It expects to see prices average $3.15 a gallon on July 4, which it says would be the lowest for the holiday since 2021.

Easing tensions in the Middle East helped to pull U.S. benchmark oil prices (CL.1) down by 8.9% in the second quarter. They tallied a 9.2% decline over the first half of the year.

Read: Can OPEC+ flood the world with crude? It's harder than oil traders think.

"As long as tensions in the Middle East remain contained and the U.S. avoids a major hurricane, we could see the national average fall below $3 per gallon later this summer," said De Haan.

The oil market, however, will also be watching the outcome of this weekend's OPEC+ meeting. The group is scheduled to meet on July 6 to decide on output levels for the month of August.

The expectation is that OPEC+ will once again agree to increase its production quota by 411,000 barrels per day for August, said Denton Cinquegrana, chief oil analyst at the Oil Price Information Service, or OPIS (a unit of Dow Jones, the publisher of MarketWatch). Anything above or below that figure would be a surprise, he added.

Eight OPEC+ members had started in April to gradually phase out voluntary production cuts that began in January 2024, and then decided to speed up the planned reintroduction of those barrels of oil in May, June and July.

The group could decide "to sit on their hands" instead of making changes to the production quota, Cinquegrana said. That could offer a bit of support for oil prices, but may only lead to a short-term market impact.

"Obviously, a few things can alter the calculus over the next couple of months," he said, with OPEC+ being just one of them.

Hurricanes in the Atlantic could also alter the current path of gasoline prices, Cinquegrana noted. Storms can impact energy production, transportation and demand in the Gulf region.

July 9, meanwhile, is a key date to watch, as it marks the end of the 90-day pause on most of President Donald Trump's "liberation day" tariffs on U.S. trading partners. The impact from that is less oil-specific and "more macro in nature," said Cinquegrana.

Still, with geopolitical tensions easing, "trader focus is in the process of returning to the conventional fundamentals - which are decidedly mixed, with OPEC+ aggressively increasing collective output targets while demand has been resilient," Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.

Energy Information Administration data revealed a "rather strong start to the summer driving season," he noted. For the week ended June 20, the EIA reported that total finished motor gasoline supplied, a proxy for demand, rose to 9.688 per million barrels per day (bpd), from 9.299 million bpd a week earlier. A year ago, demand for the week was at 8.969 million bpd.

All of those factors have helped WTI futures "stabilize" after the geopolitically fueled bout of volatility realized during the month of June, said Richey.

Any renewed risks to supply or stronger-than-expected economic data could support a rally in WTI back into the $70s, while "suddenly disappointing demand metrics in the weekly EIA data or a resurgence in recession concerns are two risks that could send futures back into the low $60s in the coming weeks," Richey added.

-Myra P. Saefong

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July 02, 2025 07:00 ET (11:00 GMT)

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