As of 9 a.m. Eastern Time today, oil is trading at $73.29 per barrel based on the Brent benchmark, which we’ll explain shortly. That’s 93 cents above yesterday morning’s level and around $2.80 more than a year ago.
Will oil prices rise?
No one can say with certainty what oil prices will do next. Many forces shape the market – but at its core it is still about supply and demand. When risks such as a potential recession or war increase, oil prices can quickly change direction.
How oil prices affect gas pump prices
When you buy gasoline at the pump, you more than cover the cost of crude oil. You also pay for every step in the process, including refiners, wholesalers, taxes, and the markup your local gas station adds.
Still, crude oil has the biggest impact on your price, often accounting for more than half of the cost per gallon. When oil prices rise, gas prices usually rise as well. But when oil prices fall, gas prices often fall much more slowly — a pattern sometimes called “rockets and feathers.”
The role of the US strategic petroleum reserve
If an emergency occurs, the United States has a reserve supply of crude oil called the Strategic Petroleum Reserve. It is primarily used to protect energy security in times of crises such as sanctions, catastrophic storm damage, and even war. It can also help cushion the blow if supply shocks push prices higher.
It is not intended to solve long-term problems. Instead, it provides rapid relief for consumers and helps keep important parts of the economy running, such as essential industries, emergency services and public transport.
How oil and natural gas prices are related
Petroleum and natural gas are two of the world’s most important energy sources. A big change in oil prices can also impact natural gas. For example, when oil prices rise, some industries substitute natural gas for certain segments of their operations when possible, increasing demand for natural gas.
Historical performance of oil
When considering the performance of oil, two key benchmarks stand out:
- Brent crude oil is the most important global oil benchmark.
- West Texas Intermediate (WTI) is the most important benchmark in North America.
Of the two, Brent provides a better picture of global oil performance as it prices a large portion of the world’s traded crude. It is also the go-to place to track the historical trends of oil prices. In fact, even the US Energy Information Administration now relies on Brent as its primary reference in its annual energy outlook.
If you look at the Brent benchmark over several decades, the price of oil has been anything but stable. There have been sharp increases associated with wars and supply cuts, but also sharp declines associated with global recessions and oversupply (so-called “oversupply”). For example:
- The early 1970s triggered the first major oil shock 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 to reduced demand and the influx of non-OPEC oil producers into the market.
- In 2008, prices rose again as global demand increased, but then collapsed along with the global financial crisis.
- During the COVID lockdown in 2020, oil demand collapsed like never before, pushing prices below $20 a barrel.
In summary, oil’s historical development has been anything but smooth. Again, it is heavily influenced by wars, recessions, whims of OPEC, changing energy 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 goods at the grocery store because it is more expensive to get these products from warehouses and farms to the shelf.