Brent crude climbs to $98.49 a barrel

Brent crude reached $98.49 a barrel at 6:15 a.m. Eastern on July 23, according to Fortune, extending a sharp rise in energy prices. The benchmark was $3.02 higher than the prior morning and $29.58 above its level a year earlier, a move that can feed into fuel costs and broader consumer prices.

Fortune reported that Brent stood at $95.47 the previous morning, meaning the latest price was up 3.16%. The benchmark was also up 24.98% from $78.80 a month earlier and 42.92% from $68.91 a year earlier.

Why oil prices can move quickly

Fortune said oil prices are difficult to predict because they respond to supply and demand as well as events that can change expectations for either side of the market. Recession concerns, wars and other disruptions can cause abrupt swings.

Oil trades around major benchmarks, with Brent crude serving as the main global marker and West Texas Intermediate serving as the primary North American benchmark, Fortune reported. Brent is often used to assess global oil performance because it prices much of the crude traded around the world.

According to Fortune, the U.S. Energy Information Administration now uses Brent as its main reference point in its Annual Energy Outlook. That reflects Brent’s role as a broad gauge of international crude markets.

What it can mean at the pump

Fortune reported that gasoline prices include several layers of cost, including crude oil, refining, wholesale costs, taxes and station markups. Crude oil usually makes up more than half of the price of a gallon, making it the largest driver in many pump-price moves.

When crude prices rise sharply, Fortune said those increases tend to reach drivers quickly. When crude falls, pump prices often decline more slowly, a pattern sometimes called the “rockets and feathers” effect.

Higher oil prices can also affect inflation beyond gasoline, according to Fortune. More expensive energy can raise costs for heating, utilities and transportation, while shipping costs can influence the price of goods such as groceries.

Emergency reserves and related markets

Fortune described the U.S. Strategic Petroleum Reserve as an emergency stockpile meant to protect energy supplies during events such as sanctions, severe storm damage or war. The reserve can also soften price spikes when supply is disrupted.

The reserve is not designed as a long-term answer to high prices, Fortune reported. Its role is closer to a short-term backstop for consumers and key parts of the economy, including emergency services, public transportation and major industries.

Oil and natural gas markets can also affect each other, according to Fortune. If oil becomes more expensive, some industries may use natural gas where possible, which can lift demand for that fuel.

How past oil shocks compare

Fortune reported that oil’s history includes sharp increases tied to conflict and supply cuts, as well as steep declines tied to recessions and oversupply. In the early 1970s, Middle Eastern export cuts and an embargo during the Yom Kippur War helped drive the first major oil shock.

Prices later fell in the mid-1980s as demand weakened and more non-OPEC supply entered the market, Fortune said. Oil rose again in 2008 as global demand increased, then dropped during the global financial crisis.

During the COVID lockdowns in 2020, demand fell sharply and prices dropped below $20 a barrel, according to Fortune. The market has also been shaped by OPEC decisions, energy policy shifts, recessions and wars.

This story draws on original reporting from Fortune.