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 is $3.78 a gallon and diesel is $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. Street prices lag the wholesale drop, so the spread between what you pay and what you charge widens until competition catches up.
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 points to a regional refinery or pipeline problem rather than the national trend.
Crude
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 overpricing a smooth return of Hormuz traffic and underrating inventories that keep drawing down. Anyone locking in supply contracts this week should weigh that.
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, tightening diesel and gasoline supply that normally reaches export markets. That has little direct effect on U.S. rack prices. It still puts 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 that B50 will absorb too much supply, which is worth watching because it tests whether the mandate actually holds at 50 percent.
What to watch
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 could be gone within a week. The Russian refinery outages matter for how long a quarter of their capacity stays down. Palm and soybean oil prices are the tell once B50 goes live July 1, since they set feedstock costs for biodiesel into 2027. And Williams is in late-stage talks to buy Momentum Midstream for about $5.5 billion, a sign the gas pipeline buildout is still running hot.