As of 8:30 a.m. ET today, oil was trading at $111.10 per barrel (using Brent as a benchmark, which we’ll get into in a moment). That’s 16 cents lower than yesterday morning and an increase of $37.69 last year.
Will the price of oil 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. Also, when the threats of recession, war, etc. are high, the path of oil can change rapidly.
How do oil prices translate to gas pump prices?
When you pay for gas at the pump, you are paying for more than just the crude oil itself; you’re looking for close links in the chain, like refineries and wholesalers – not to mention taxes and local gas station tolls.
However, the crude oil component affects the final price significantly, as it usually accounts for more than half of the price per gallon. When oil prices rise, so does the price of gas. And ironically, when oil prices fall, gas prices tend to take their time to drop to lower prices (sometimes called “rocket and feather”).
Part of the US Strategic Petroleum Reserve
In an emergency, the US has a store of crude oil known as the Strategic Petroleum Reserve. Its main purpose is energy security in the event of a disaster (think sanctions, severe storm damage, even war). But it can also go a long way in mitigating crippling inflation during supply shortages.
It’s not a long-term answer – immediate help to help consumers and keep important sectors of the economy running, such as key industries, emergency services, public transport, etc.
How are the prices of oil and natural gas related?
Oil and natural gas are both major energy fuels. A large change in oil prices can affect natural gas in addition. For example, if the price of oil rises, some industries may switch to natural gas for other parts of their operations where possible—increasing demand for natural gas.
Historical performance of oil
When evaluating oil performance, there are usually two main parameters:
- Brent crude oil is the largest amount of oil in the world.
- West Texas Intermediate (WTI) is the largest number in North America.
Between the two, Brent better represents the world’s oil performance because it is bought for most of the world’s traded products. Also, it is often the best way to evaluate historical oil performance. In fact, even the US Energy Information Administration now uses Brent as its primary reference in its Annual Outlook.
If you look at the Brent benchmark over several decades, oil has been relatively stable. It is seen as a result of factors such as wars and supply shortages, and is also seen in global recessions and oversupply (called “gluts”). For example:
- The early 1970s brought the first major oil panic as the Middle East cut exports and imposed embargoes on the US and others during the Yom Kippur War.
- Prices fell in the mid-1980s due to factors such as low demand and many non-OPEC producers entering the industry.
- Prices rose again in 2008 with increased global demand, but soon fell in the wake of the global financial crisis.
- During the 2020 COVID shutdown, oil demand collapsed like never before – bringing prices below $20 per barrel.
All told, the historical performance of oil was not easy. Also, it is heavily affected by wars, recessions, OPEC whims, energy development initiatives and policies, and much more.
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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 is highly dependent on supply and demand, including issues related to supply and demand in the future (geopolitics, decisions made by OPEC+, etc.). In America, prices also move depending on how friendly the system is to drilling, as it can affect future supply. For example, 2025 saw the Trump administration reopen more than 1.5 million acres in the Arctic Coast National Wildlife Refuge for oil and gas leasing, reversing the Biden administration’s plan to limit Arctic oil drilling.
How often does the price of oil change during the day?
The price of oil is updated regularly when the “futures” markets are open. The futures market is an auction where people agree to buy or sell oil in the future. As long as people and companies are selling contracts, the price of oil is changing.
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 untapped energy. The more US access to shale, the more energy we’ll have – and oil prices can keep from rising too much due to oversupply.
How does the current price of oil affect inflation and the broader economy?
When oil is expensive, it tends to make everyday things more expensive. This can be related to energy (your heat, gas appliances, etc.), but it’s also because of the resources involved in getting those things to you. For example, shipping can affect the price of items at the grocery store, as it costs more to get those products from warehouses and farms to the shelf.
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