US petrol falls below $4 a gallon for first time since July

The average price of regular petrol in the United States dropped below $4 per gallon on Tuesday for the first time since July, reaching $3.9788, according to data from the American Automobile Association (AAA). The price fell by about 17 cents compared with the previous week and by nearly 39 cents from a month earlier, as reported by CNBC.

The decline at the pump follows a significant slowdown in energy inflation. The US Bureau of Labor Statistics said energy prices rose by 0.7% in October, down from a 5.2% increase in September. For petrol alone, the monthly rise slowed from 9.1% to 1%.

Analysts at Bespoke Investment Group noted that cheaper crude oil and the usual seasonal drop in demand both contributed to lower fuel costs. "While lower oil prices have helped bring petrol prices down, it is perfectly normal for fuel prices to fall at this time of year," they explained.

Brent crude, the international benchmark, temporarily fell below $90 per barrel on Tuesday for the first time since August. Statements from US President Donald Trump have fuelled hopes of an end to the conflict between the United States and Iran, which has lasted nearly nine months. The gradual resumption of oil deliveries from the Persian Gulf is also easing price pressures. ING estimated that crude exports from the region, including pipeline shipments, have returned to about 80–85% of pre-war levels.

"Energy markets remain under pressure as hopes of de-escalation in the Middle East reduce geopolitical risk premiums. Oil continued its decline as Gulf supplies recovered," ING analysts said.

However, Federal Reserve Governor Christopher Waller warned that energy shocks could have more persistent effects on inflation than before the pandemic. He noted that although energy prices have fallen recently, they remain considerably above levels from the start of the year, and the final impact on inflation will depend on their longer-term trajectory.