At 9:35 a.m. Eastern Time today, oil was selling for $101.61 per barrel (using Brent as the benchmark, which we’ll get to in more detail in a moment). That’s about $2.72 less than the day before, but about $34.68 more than last year.
Will oil prices rise?
It is impossible to predict the future of oil prices. Several factors determine the movement of oil, but ultimately it comes down to supply and demand. The same applies here: If the risk of an economic downturn, war, etc. is great, the development of the oil price can change quickly.
How oil prices affect gas pump prices
When you pay for gas at the pump, you’re not just paying for the crude oil itself; They also rely on links along the chain, such as refineries and wholesalers – not to mention taxes and local gas station surcharges.
Still, the crude oil aspect has the biggest impact on the final price, typically accounting for more than half of the price per gallon. When oil prices rise, gas prices also rise. And it’s frustrating: When oil prices fall, gas prices tend to slowly fall to the lower price (sometimes called “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 an immediate relief to support the consumer and keep important parts of the economy running, such as key industries, emergency services, public transport, etc.
How oil and natural gas prices are related
Both oil and natural gas are important energy sources. A big change in oil prices can also impact natural gas. For example, when oil prices rise, some industries swap natural gas for certain segments of their operations when possible—increasing demand for natural gas.
Historical performance of oil
When testing the performance of oil, there are generally two important benchmarks:
- Brent crude oil is the most important global oil benchmark.
- West Texas Intermediate (WTI) is the most important benchmark in North America.
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 items at the grocery store because it is more expensive to get these products from warehouses and farms to the shelf.