As of 9 a.m. Eastern Time today, oil was at $73.74 per barrel, using Brent as the benchmark (we’ll discuss various benchmarks later in this article). That’s down 28 cents from yesterday morning and about $5.76 more than the price a year ago.
Will oil prices rise?
It is impossible to predict oil prices with any granular precision. Many different elements influence the market, but ultimately it comes down to supply and demand. As concerns about economic recession, war, and other major disruptions increase, the trajectory of oil prices can change quickly.
How oil prices affect gas pump prices
Gasoline prices at the pump don’t just reflect crude oil. This also includes the cost of refining and transporting the fuel, the taxes on it, and the additional surcharge your local gas station charges to stay in business.
Since crude oil generally accounts for a majority of the cost per gallon, price changes have an outsized impact. When oil prices rise, gas prices usually rise as well. But when oil prices decline, gas prices often lag behind, a trend sometimes referred to as “rockets and feathers.”
The role of the US strategic petroleum reserve
In case of emergency, the US has a reserve of crude oil known as the Strategic Petroleum Reserve. Its primary purpose is energy security in the event of a disaster (think sanctions, severe storm damage, or even war). But it can also do a lot to mitigate crippling price increases during supply shocks.
This is not a long-term solution, but rather temporary relief, supporting consumers and maintaining critical parts of the economy such as key industries, emergency services, public transport, etc.
How oil and natural gas prices are related
Both oil and natural gas are important sources of energy that we use every day. For this reason, a large change in oil prices can 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
To measure oil performance, we often turn to two benchmarks:
- Brent crude oilthe most important global oil benchmark.
- West Texas Intermediate (WTI)the most important benchmark in North America
Of these two values, Brent better represents global oil performance as it prices a majority of the world’s traded crude oil. And it’s often the best way to track historical oil development. In fact, even the US Energy Information Administration now uses Brent as the primary reference in its annual energy outlook.
Looking at the Brent benchmark over several decades, the price of oil has been anything but stable. There have been spikes due to factors such as wars and supply cuts, but also dips due to global recessions and oversupply (so-called “oversupply”). For example:
- The early 1970s brought 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 for reasons such as lower demand and increasing entry of non-OPEC oil producers into the industry.
- In 2008, prices rose again due to increasing global demand, but soon crashed 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.
All in all, the historical development of the oil price has been anything but smooth. Again, it is heavily influenced 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 goods at the grocery store because it is more expensive to get these products from warehouses and farms to the shelf.