AAA’s national average for a gallon of regular gasoline slipped to $3.790, extending a steady decline that gave Fourth of July travelers a welcome break at the pump. The pullback tracks a crude oil market that has spent recent weeks near its lowest levels since late February, as Gulf supply returns and OPEC+ continues to unwind its production curbs.

The relationship is direct: crude accounts for roughly 55 to 60% of the retail price of gasoline. With WTI trading around $70 and Brent near $74 — both still close to four-month lows despite a security-driven spike this week — the wholesale cost of fuel has fallen sharply from its wartime highs. Because retail prices lag the futures market by one to two weeks, more of that decline has yet to reach the pump.

State-level prices continue to span a wide range. Indiana is the cheapest market in the country at $3.06 a gallon, with Oklahoma ($3.32), Texas ($3.32), Mississippi ($3.42) and Arkansas ($3.43) also among the lowest. California remains the most expensive at $5.37, followed by Hawaii ($5.46), Washington ($5.02), and Oregon ($4.56). The gap reflects the usual mix of state taxes, fuel-blend requirements, and refining and distribution costs.

Diesel, a key cost input for freight and agriculture, eased to a national average of $4.790, holding well below $5 as the broader fuel complex retreats from its conflict-era peaks. The decline in distillate prices is a welcome development for the supply chains that absorbed the brunt of the war’s disruption to refining and shipping.

The near-term outlook points lower so long as crude stays anchored. With OPEC+ adding barrels, Saudi Aramco cutting its Arab Light price to Asian buyers, and Persian Gulf exports approaching pre-war levels, the supply backdrop remains firmly bearish for prices. A national average drifting toward the year-ago level near $3.20 is plausible if oil holds near current levels through the summer.

The clearest risk to that relief is geopolitical. On Tuesday, Iran attacked a Qatari LNG tanker near the Strait of Hormuz and the U.S. revoked Iran’s oil-sale license, sending crude sharply higher. If the Hormuz standoff escalates further, the recent slide at the pump could stall or reverse — a reminder that the drivers of cheaper gas remain tethered to a fragile peace.

Continuing coverage: Gas Prices by State · Oil Prices · Geopolitics.