As of 6:35 a.m. Eastern Time on August 12, 2026, the price of oil stood at $91.60 per barrel, measured against the Brent benchmark. That figure represents a decline of 94 cents from the previous morning and is approximately $25 higher than at the same point a year earlier.

What Drives Oil Prices

The future trajectory of oil prices cannot be predicted with certainty. While numerous variables influence trading activity, supply and demand remain the primary forces. Oil prices can shift sharply in response to fears of economic slowdown, geopolitical conflict, or other disruptive events.

From Crude Oil to Gas Pump Prices

The retail price displayed at a gas station reflects more than the cost of crude oil alone. It also incorporates refining expenses, wholesale distribution costs, various taxes, and the retail margin charged by the local station.

Even so, crude oil remains the single largest component of the final pump price, typically accounting for more than half the cost of each gallon. When oil prices spike, gasoline prices tend to rise quickly. Conversely, when oil prices fall, gasoline prices generally decline at a much slower pace—a pattern economists refer to as "rockets and feathers."

The U.S. Strategic Petroleum Reserve

The United States maintains an emergency stockpile of crude oil known as the Strategic Petroleum Reserve (SPR). Its principal purpose is to protect energy security during crises, including situations involving sanctions, severe storm damage, or armed conflict. The SPR can also help mitigate the impact of sudden supply disruptions that drive prices higher.

The reserve is not intended as a permanent solution. Rather, it is designed to provide immediate support for consumers and ensure that critical sectors of the economy—such as key industries, emergency services, and public transportation—can continue to function during supply shocks.

The Link Between Oil and Natural Gas Prices

Both oil and natural gas serve as major energy sources, and significant shifts in oil prices can influence natural gas markets indirectly. When oil prices rise, certain industries may substitute natural gas for oil in specific operational areas, thereby increasing demand for natural gas.

Key Oil Benchmarks

Oil prices are commonly tracked using two major benchmarks:

• Brent crude oil: The primary global oil benchmark.
• West Texas Intermediate (WTI): The primary benchmark for North America.

Of the two, Brent offers a more representative picture of global oil market performance, as it prices a substantial portion of the world's traded crude. It is also widely regarded as the best reference for reviewing long-term oil price trends. The U.S. Energy Information Administration now uses Brent as its primary reference point in its Annual Energy Outlook.

Historical Volatility in Oil Prices

Examined over multiple decades, the Brent benchmark reveals that oil prices have been highly volatile. Prices have surged due to wars and supply cuts, and have plummeted during global recessions and periods of oversupply, commonly referred to as a "glut."

Notable historical episodes include:

• Early 1970s: The first major oil shock occurred when Middle Eastern producers cut exports and imposed an embargo on the United States and other nations during the Yom Kippur War.
• Mid-1980s: Prices declined amid weaker demand and the entry of more non-OPEC producers into the market.
• 2008: Prices spiked with rising global demand, then crashed in tandem with the global financial crisis.
• 2020: During COVID-19 lockdowns, oil demand collapsed to unprecedented levels, sending prices below $20 per barrel.

In summary, oil's historical performance has been marked by significant instability, driven heavily by wars, recessions, OPEC decisions, evolving energy policies, and other macroeconomic forces.

Factors Behind the Current Price

The price of oil per barrel depends largely on supply and demand dynamics, including expectations about future supply and demand shaped by geopolitical developments and decisions made by OPEC+, a coalition that includes the 12 OPEC member states plus additional non-member producers such as Russia. In the United States, prices are also influenced by an administration's stance on drilling, which can affect future supply projections. In 2025, for example, the Trump administration moved to reopen more than 1.5 million acres in the Coastal Plain of the Arctic National Wildlife Refuge for oil and gas leasing, reversing the Biden administration's policy of restricting Arctic oil drilling.

Oil prices update continuously during trading hours on the futures markets. A futures market functions as an auction in which participants agree to buy or sell oil at a predetermined date. As long as trading activity continues, the price of oil fluctuates in real time.

Shale's Role in Supply

Shale is sedimentary rock containing trapped oil and natural gas, effectively representing untapped energy reserves. Advances in hydraulic fracturing and horizontal drilling over the past two decades have made large volumes of previously inaccessible shale resources economically viable, helping transform the United States into the world's largest crude oil producer. The more shale resources the United States is able to access, the greater the available energy supply—and the more cushion there is against sharp price increases driven by supply constraints.

Broader Economic Effects of Oil Prices

When oil becomes expensive, the cost of everyday goods tends to rise. This effect extends beyond direct energy costs such as heating and gas utilities. It also stems from the logistics involved in bringing products to consumers. Higher shipping costs, for instance, can increase prices at grocery stores, as it becomes more expensive to transport goods from warehouses and farms to retail shelves. Sustained periods of elevated oil prices can therefore contribute to broader inflationary pressure, which central banks around the world factor into their monetary policy decisions.