By 8 a.m. Eastern Time today, oil had reached $103.98 per barrel, measured using the Brent benchmark. That’s $4.36 less than it cost yesterday morning and about $36 above its price a year earlier.
Will oil prices go up?
Oil prices are inherently unpredictable. While many variables come into play, the basic push and pull of supply and demand is what ultimately matters. In times of heightened concern about recession, war, or other major disruptions, oil can swing suddenly.
How oil prices translate to gas pump prices
Each gallon you pay for at the pump bundles together several costs. Crude oil is one piece, but you also pay for refineries, wholesalers, government taxes, and the price markup set by gas stations.
Because crude oil usually accounts for more than half of the price per gallon, it tends to move the needle the most. Sharp increases in oil almost always show up quickly at the pump. Declines in the price of oil, on the other hand, often translate into slower, more delayed drops in gas prices—the “rockets and feathers” effect.
The role of the U.S. Strategic Petroleum Reserve
When an emergency arises, the U.S. has a reserve of crude oil called the Strategic Petroleum Reserve. Its chief function is to secure energy during disasters like sanctions, severe storm damage, or war. It can also help take the edge off brutal price spikes when supply gets hit.
It’s not a solution for the long haul. It’s more of an immediate safety net to support consumers and keep crucial sectors of the economy running (think key industries, emergency services, public transportation, and the like).
How oil and natural gas prices are linked
Oil and natural gas are two of the main fuels that keep the world running. A big change in oil prices can end up affecting natural gas. As an example, if oil prices increase, some industries may sub natural gas for certain areas of their operations wherever possible. This can increase demand for natural gas.
Historical performance of oil
The oil market typically tracks two benchmarks:
- Brent crude oil (the main global oil benchmark)
- West Texas Intermediate (WTI) (the main benchmark of North America)
Between the two, Brent offers a clearer view of global oil performance because it prices much of the world’s traded crude. It’s also often the preferred gauge for tracking historical oil trends. In fact, the U.S. Energy Information Administration now uses Brent as its primary reference in its Annual Energy Outlook.
Looking at the Brent benchmark over multiple decades, you’ll find oil has been anything but stable. It’s seen sharp rises due to factors like wars and supply cuts, along with steep declines tied to global recessions and oversupply (called a “glut”). For example:
- The early 1970s saw the first major oil shock when the Middle East slashed exports and placed an embargo on the U.S. and others during the Yom Kippur War.
- Prices fell in the mid-1980s for reasons including lower demand and the entry of more non-OPEC oil producers.
- Prices jumped again in 2008 with increased global demand, but then plunged alongside the global financial crisis.
- During the 2020 COVID lockdown, oil demand collapsed like never before—bringing prices below $20 per barrel.
Bottom line, oil’s historical performance has been anything but smooth. It’s hugely affected by wars, recessions, OPEC whims, evolving energy initiatives and policies, and much more.
Energy coverage from Fortune
Looking to stay up-to-date regarding the latest energy developments? Check out our recent coverage:
- An energy crisis looms for Europe’s industrial giants. For GEA Group, it’s an opportunity
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Frequently asked questions
How is the current price of oil per barrel actually determined?
The current price of oil per barrel depends largely on supply and demand, including news about potential future supply and demand (geopolitics, decisions made by OPEC+, etc.). In the U.S., prices also move based on how friendly an administration is to drilling, as it can affect future supply. For example, 2025 saw the Trump administration move to reopen more than 1.5 million acres in the Coastal Plain of the Arctic National Wildlife Refuge for oil and gas leasing, reversing the Biden administration’s policy of limiting oil drilling in the Arctic.
How often does the price of oil change during the day?
The price of oil updates constantly when the “futures” markets are open. A futures market is effectively an auction where people agree to buy or sell oil in the future. As long as people and companies are trading contracts, the oil price is changing.
How does U.S. shale oil production affect the current price of oil?
In short, shale is rock that contains oil and natural gas. Think of shale as energy yet to be tapped. The more shale the U.S. accesses, the more energy we’ll have—and the more easily oil prices can keep from spiking as much thanks to a greater supply.
How does the current price of oil impact inflation and the broader economy?
When oil is expensive, it tends to make everyday items cost more. This can be related to energy (your heating, gas utilities, etc.), but it’s also due to the logistics involved with making those items accessible to you. Shipping, for example, can affect the price of things at the grocery store, as it’s more expensive to get those products from warehouses and farms onto the shelf.
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