Due to new market expectations and lower oil prices, consumer relief at the pump has been rapid, and more likely in the coming days. The national average gas price, which was $4.14 on Election Day, has already fallen to $3.97.
Diesel prices have also fallen sharply in recent days, from $6.28 a gallon on Election Day to $6.15, which could ease even more pressure on consumers at the grocery store or during their Christmas shopping.
Economists say rising diesel prices can quickly feed into inflation on grocery and department store shelves, since the fuel is essential to moving goods across the country and around the world by train, ship and truck.
The rise in diesel has been far greater than the rise in gasoline prices, with commercial fuel prices still up more than 70% since the start of the year, driven not only by the war in Iran, but also by continued attacks on energy infrastructure during the war between Ukraine and Russia.
Ukrainian President Volodymyr Zelenskyy has vowed to continue hitting Russian energy assets in retaliation for attacks on Ukraine. Russia is historically one of the largest exporters of diesel to the rest of the world.
The United States is hosting talks between Russia and Ukraine in Abu Dhabi on Tuesday, the first trilateral negotiations since February.
But analysts warn that oil markets still face several significant risks, which could limit a further decline or trigger a new rise in prices.
“How this will all play out is still very uncertain,” the ING team said, adding that in their assessment, “the degree and speed with which the oil market has sold off appears exaggerated.”
Oil markets will also need to support the replenishment of hundreds of millions of barrels of reserves that have been drained this year in an attempt to contain prices. The United States’ strategic petroleum reserves currently contain the smallest amount of crude oil since 1982.
Commodities analysts at Citigroup noted that “the period between now and January 3, when the new Democratic Congress is in session, is a ‘lame duck’ window during which the White House could seek to advance its foreign policy goals as well as make personnel changes with fewer political constraints.” »
“This period could see either an acceleration of negotiations or a further escalation, meaning markets could remain volatile even as the long-term direction points toward an eventual diplomatic resolution,” Citi analysts wrote.
Trump has already announced some changes. Susie Wiles left the White House as Trump’s chief of staff on Friday, replaced by Stephen Miller, the architect of the administration’s hard-line immigration crackdown.
The Citi team also said that the recent Israeli elections could have implications for oil prices. “The recent inconclusive Israeli elections mean that Prime Minister Netanyahu may continue to pressure the United States to be more hawkish on Iran for the time being. »
On Saturday, Netanyahu’s long tenure took another step toward its end. Israeli President Isaac Herzog has given Netanyahu’s rival Gadi Eisenkot the chance to form the country’s next government. But for at least the next six weeks, Netanyahu remains in place.
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