At 6:15 a.m. Eastern Time today, oil prices reached $95.40 per barrel, as measured by the Brent benchmark. That’s $1.80 more than yesterday morning and $28.19 more than the price a year ago.
Will oil prices rise?
Oil prices are inherently unpredictable. While many variables come into play, what ultimately matters is the fundamental push and pull of supply and demand. During times of greater concern about a recession, war or other major disruption, oil prices may experience sudden fluctuations.
How oil prices affect gas pump prices
There are several costs for every gallon you pay at the pump. Crude oil is one thing, but you also pay for refineries, wholesalers, government taxes, and gas station markup.
Because crude oil typically accounts for more than half the price per gallon, it tends to move the needle the most. Significant increases in oil almost always quickly become noticeable at the pump. On the other hand, a decline in oil prices often leads to a slower and more delayed decline in gas prices – the “rocket and feathers effect.”
The role of the US strategic petroleum reserve
In case of an emergency, the US has a reserve of crude oil called the Strategic Petroleum Reserve. Its main task is to ensure energy in the event of disasters such as sanctions, severe storm damage or war. It can also help mitigate brutal price spikes when supply declines.
It’s not a long-term solution. Rather, it is an immediate safety net to support consumers and keep key economic sectors running (think key industries, emergency services, public transport and the like).
How oil and natural gas prices are related
Oil and natural gas are two of the most important fuels that keep the world running. A big change in oil prices can ultimately impact natural gas. For example, if oil prices rise, some industries may choose to substitute natural gas for certain aspects of their operations, if possible. This can increase the demand for natural gas.
Historical performance of oil
The oil market typically follows two benchmarks:
- Brent crude oil (the main global oil benchmark)
- West Texas Intermediate (WTI) (the most important benchmark in North America)
Brent offers a clearer view of global oil developments as it prices much of the world’s traded crude. It is also often the preferred metric for tracking historical oil trends. In fact, the US Energy Information Administration now uses Brent as the primary reference in its annual energy outlook.
If you look at the Brent benchmark over several decades, you will see that the price of oil has been anything but stable. There have been sharp increases due to factors such as wars and supply cuts, but also sharp declines related to global recessions and oversupply (so-called “oversupply”). For example:
- The first major oil shock occurred in the early 1970s when the Middle East restricted exports and imposed an embargo on the United States and other countries during the Yom Kippur War.
- In the mid-1980s, prices fell due, among other things, to lower demand and the entry of more oil producers outside of OPEC.
- In 2008, prices rose again due to increasing global demand, but then collapsed in the wake of the global financial crisis.
- During the 2020 COVID lockdown, oil demand collapsed like never before – prices fell below $20 per barrel.
The bottom line is that the historical development of the oil price has been anything but smooth. It is heavily affected by wars, recessions, OPEC whims, evolving energy initiatives and policies, and much more.
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Frequently asked questions
How is the current oil price 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, OPEC+ decisions, etc.). In the US, prices also fluctuate depending on how friendly a government is to drilling, as this can affect future supply. For example, in 2025, the Trump administration decided to reopen more than 1.5 million acres in the coastal plain of the Arctic National Wildlife Refuge to 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 throughout the day?
The price of oil is constantly updating 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 enter into contracts, the price of oil changes.
How does US shale oil production affect the current price of oil?
In short, shale is a rock that contains oil and natural gas. Think of shale as energy yet to be tapped. The more shale oil the U.S. gets, the more energy we will have — and the easier it will be for oil prices to prevent such a sharp rise thanks to greater supply.
How does the current oil price affect inflation and the overall economy?
When oil is expensive, everyday items tend to be more expensive. This can be related to energy (heating, gas supply, etc.), but it can also be due to the logistics involved in providing these things to you. For example, shipping can affect the price of items at the grocery store because it is more expensive to get these products from warehouses and farms to the shelf.