Brent crude falls to $84.64 a barrel in early trading

Brent crude traded at $84.64 a barrel at 5:30 a.m. Eastern on July 16, according to Fortune, marking a pullback from the previous morning. The move matters for consumers because crude oil is a major input in gasoline prices and can feed into shipping and energy costs across the economy.

Fortune reported that the Brent benchmark was down $1.28 from $85.92 the prior morning, a 1.48% decline. The price was nearly flat compared with a month earlier, when Brent stood at $84.77, but remained well above its year-earlier level of $69.26.

On a year-over-year basis, Fortune said Brent was up 22.20%. The one-year gain shows how much energy costs can shift even when short-term price moves appear modest.

Oil prices remain hard to forecast

Fortune said oil prices respond to supply and demand, but the market can move quickly when traders assess risks tied to recessions, wars or major disruptions. Those risks can affect expectations for how much oil will be available and how much buyers will need.

The market is usually tracked through two major benchmarks, according to Fortune. Brent crude is the main global gauge, while West Texas Intermediate, or WTI, is the main benchmark for North America.

Fortune said Brent is often the clearer measure for worldwide oil pricing because it reflects a large share of internationally traded crude. The U.S. Energy Information Administration now uses Brent as its main reference point in the agency’s Annual Energy Outlook, according to Fortune.

What it means for gasoline

Fortune said the price paid at a gas station includes more than crude oil. Refining, wholesale costs, taxes and gas station markups all contribute to the retail price of a gallon of fuel.

Crude oil usually makes up more than half the price of a gallon, Fortune said, which gives it an outsized role in pump prices. Fortune said sharp oil increases tend to reach drivers quickly, while declines in crude often take longer to show up in retail gasoline prices.

Higher oil prices can also affect prices beyond the pump, according to Fortune. More expensive oil can raise costs for heating, utilities and the transport of goods, including products moved from farms and warehouses to grocery shelves.

Emergency reserves and related fuel markets

Fortune said the U.S. Strategic Petroleum Reserve is designed to protect energy supplies during emergencies such as sanctions, severe storm damage or war. The reserve can also soften price spikes when supply is disrupted, though Fortune described it as a short-term tool rather than a lasting fix.

Oil can also influence natural gas demand, according to Fortune. If oil prices rise, some industries may switch to natural gas where their operations allow it, which can increase demand for gas.

A market shaped by shocks

Fortune said oil’s history includes sharp swings tied to wars, recessions, production decisions and oversupply. The early 1970s brought a major oil shock after Middle Eastern exporters cut shipments and imposed an embargo on the U.S. and others during the Yom Kippur War, according to Fortune.

Prices later fell in the mid-1980s as demand weakened and more non-OPEC production entered the market, Fortune said. In 2008, prices rose with stronger global demand before dropping during the global financial crisis.

Fortune said the 2020 COVID lockdowns caused oil demand to collapse, pushing prices below $20 a barrel. Those episodes underline why traders and consumers watch the Brent price closely, even on days when the move is relatively small.

This story draws on original reporting from Fortune.