US gas prices fell below $4 for the first time since March. It is still 25% higher than last year

NEW YORK (AP) — U.S. gas prices fell below $4 a gallon on average Thursday, but just barely.

This is the first time since March that the average cost of a gallon of regular has been this low. Prices fell overnight after President Donald Trump signed an agreement with Iran calling on Tehran to reduce its stockpile of highly enriched uranium and waive US-backed sanctions on the country.

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Gas prices average $3,999 in the United States, according to the AAA Auto Club. The drop below $4 comes after a 15% decline in the price of US crude this month.

But fluctuations in gas prices persist across the country. In California, gas prices average $5.64 per gallon, while in South Carolina they are $3.58 per gallon.

The US-Iran agreement calls for a permanent cessation of hostilities and begins a 60-day negotiating clock to reach a final agreement on the future of Iran’s nuclear program, although Trump has left the door open to resume attacks. It appears to be offering Iran many benefits up front while getting little in return.

Read more: What does the agreement to end the American war in Iran include, according to an American official?

Oil prices fell on Monday to about $80 per barrel of standard US crude. This compares to $67 per barrel before the war and a price of more than $120 per barrel reached earlier in the conflict.

Even as gas prices begin to fall, it is expected to take weeks or months for oil to start flowing through the Strait of Hormuz again.

Before the war, the strait transported a fifth of the world’s crude oil. Now, it will take some time for hundreds of ships trapped in the Persian Gulf to emerge through the narrow strait. Gulf oil producers who have reduced their production will need time to move the oil again. Analysts also say ship captains may take their time to decide whether passage is safe and that the threat of an attack from Iran has already receded.

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In addition, refiners typically pay for crude oil a month or more in advance, so even after oil prices fall, they will not immediately process the cheaper products.

The fighting around the Strait of Hormuz has disrupted not only crude and refined fuel supplies, but also supply chains for fertiliser, food, and even shoes. Businesses expect costs to continue to rise, which means their customers may need to prepare for that as well.