National gas average falls to $3.78 before July 4 as crude stays soft

Pump prices are sliding into the holiday weekend. The national average sits at $3.78 a gallon and diesel at $4.87, AAA puts the gas number under $4 across most of the country, and stations from Birmingham to Peoria have shaved another 13 cents off in a week. For c-store operators that means fatter fuel margins right when traffic peaks, because street prices lag the wholesale drop and the spread between what you pay and what you charge widens before competition closes it.

The driver is crude. Tensions between Washington and Tehran eased after the ceasefire, the war premium came out of the barrel, and that worked its way to the rack. Not every market followed. Michigan gas is up 9 cents on the week, which usually means a regional refinery or pipeline hiccup, not the national trend.

Crude

Here is the catch for anyone locking in supply contracts this week. Oil climbed early Monday on a fresh weekend flare-up between the U.S. and Iran. The rise came late and small, because traders are still betting on a peace deal and discounting the geopolitical risk. Some analysts think that bet is too relaxed, that the market is too optimistic about Hormuz traffic returning and too complacent about global inventories still drawing down.

Middle East production tells the calmer story. Output rebounded to between 14.6 and 15 million barrels a day this month, and Rystad now expects a full recovery to pre-war levels by year end, three months sooner than it figured before. That forecast landed before the latest strikes hit the wires. If the fighting picks back up, the cheap holiday gas could reverse fast.

Russia

A quarter of Russia's refining output is offline. Strikes on refineries have triggered fuel shortages across more than 50 regions, which tightens diesel and gasoline supply that normally reaches export markets. It does not move U.S. rack prices directly. It does put a floor under global product cracks, and it is one more reason the soft crude picture may not hold.

Biodiesel

Indonesia starts its B50 mandate July 1, lifting the biodiesel blend to 50 percent palm oil. Palm climbed for a second session on the export demand and the mandate, and the program pulls a large slug of palm off the global vegoil market. That ripples into U.S. soybean oil, where higher biomass diesel targets under the renewable fuel standard are already expected to lift soybean demand. Feedstock costs for domestic biodiesel blenders could firm up through the back half of the year.

Indonesian palm farmers are nervous about B50 absorbing supply, and that tension is worth tracking because it tests whether the mandate actually sticks at 50 percent.

What to watch

Whether the U.S.-Iran ceasefire holds through the July 4 weekend. If the new strikes escalate, the war premium goes back into crude and the cheap holiday gas evaporates inside a week. Watch the Russian refinery outages for how long a quarter of their capacity stays down. Watch palm and soybean oil prices once B50 goes live July 1, since that sets feedstock costs for biodiesel into 2027. And keep an eye on Williams, which is in late-stage talks to buy Momentum Midstream for about $5.5 billion, a sign the gas pipeline buildout is still running hot.