US gasoline prices fall on Hormuz opening, remain elevated against pre-war levels

US gasoline prices all shifted weaker upon news of a ceasefire and reopening of the Strait of Hormuz April 17. However, despite the drop, values remained elevated when compared to pre-war prices.

While the announcement that Iran would open the integral shipping route lifted hopes that global oil supply would return to normal, the deal remained fragile and sides are still negotiating a comprehensive peace agreement.

Analysts warned that prices would continue to be volatile until a longer-term deal is reached and vessel traffic remains steady.

"We see the day's announcement as a step in the right direction toward the normalization of global oil trade," S&P Global Energy CERA analysts James Bambino and Richard Joswick said in an April 17 note, "The market should expect significant volatility as negotiations progress. The durability of the ceasefire remains acutely uncertain."

On the US Gulf Coast, outright prices slipped following weaker futures.

NYMEX June RBOB contracts fell by 16.18 cents/gal ending the session at $2.9295/gal.

Tracing weakness seen in futures contracts and falling differentials; outright prices for CBOB 87 and RBOB 83.7 tumbled.

Since April 6, the outright price for CBOB 87 has fallen 28.37 cents/gal from conflict highs of $3.2357/gal.

On April 17, the outright price for CBOB 87 ended the session down 18.43 cents/gal at $2.7545/gal while RBOB 83.7 ended the session down 16.93 cents/gal at $2.9120/gal.

Even as outright prices saw relief, the CBOB 87 outright price sits 72 cents above the Feb. 27 pre-war price of $2.0335/gal.

According to S&P Global Commodities at Sea, gasoline and naphtha exports climbed from 753,000 b/d in February to 1.1 million b/d in March as countries look to diversify product origin.

Along the import-dependent US West Coast, where gasoline prices have been acutely susceptible to global oil flow disruptions, Los Angeles CARBOB dropped 10.89 cents to end the day at $3.5448/gal. While the price was down on the day, it was only slightly lower than the month-to-date average of $3.5704/gal, according to Platts data. LA CARBOB has spiked nearly 44% and remained $1.0743 higher than before the Middle East war.

Active buying was observed in the Midwest market this week as prices began to soften.

Platts assessed benchmark Group 3 V-grade regular suboctane in Oklahoma, 0.25 cent weaker on the day at NYMEX May RBOB futures minus 33.75 cents/gal. However, V-grade's outright price ended the day 16.14 cents lower at $2.6673/gal -- tracking futures weaker. It was the lowest outright price for the grade since April 8 but was still 56.68 cents higher than before the war despite Friday's drop

Platts is part of S&P Global Energy.