Brent crude falls to $89.94 a barrel on June 12

Brent crude oil traded at $89.94 a barrel at 8:50 a.m. Eastern on June 12, according to Fortune. The move matters for consumers and businesses because crude prices feed into fuel costs, shipping expenses and inflation pressures, Fortune reported.

Fortune said the June 12 price was $5.21 lower than the prior morning’s $95.15 reading, a 5.47% decline. Compared with one month earlier, when Brent stood at $107.67, the benchmark was down 16.46%, according to Fortune.

Oil remained well above its year-earlier level, Fortune reported. Brent was priced at $70.70 a barrel one year earlier, putting the June 12 reading 27.21% higher by Fortune’s calculation.

What drives the price

Fortune said oil prices cannot be forecast with precision because the market responds to supply, demand and expectations about both. The publication cited recession fears, war and other large disruptions as factors that can change the direction of prices quickly.

Fortune identified Brent crude and West Texas Intermediate as the two main oil benchmarks used to track the market. Brent is the primary global benchmark, while WTI is the main North American benchmark, according to Fortune.

Fortune said Brent is often used to assess global oil performance because it prices much of the world’s traded crude. The U.S. Energy Information Administration now uses Brent as its main reference in its Annual Energy Outlook, Fortune reported.

Why drivers may care

Retail gasoline prices do not move only with crude oil, Fortune reported. Pump prices also reflect refining, transportation, taxes and gas station markups, according to the publication.

Still, Fortune said crude oil usually accounts for most of the cost of a gallon of gasoline, giving oil prices a large role in what drivers pay. When crude rises, gasoline prices tend to climb as well, while declines in crude can take longer to show up at the pump, a pattern Fortune described as “rockets and feathers.”

Strategic reserves and other energy links

Fortune said the U.S. Strategic Petroleum Reserve is designed to protect energy security during emergencies such as sanctions, storm damage or war. The reserve can also help cushion consumers and parts of the economy during supply shocks, but Fortune described it as temporary relief rather than a lasting fix.

Oil and natural gas prices can affect each other because both are major energy sources, Fortune reported. If oil becomes more expensive, some industries may use more natural gas where they can, lifting demand for gas, according to Fortune.

Longer-term swings

Fortune said Brent’s history shows repeated sharp moves tied to wars, supply cuts, recessions, oversupply, OPEC decisions and energy policy changes. The publication cited the early 1970s oil shock, when Middle Eastern producers cut exports and imposed an embargo on the U.S. and others during the Yom Kippur War.

Fortune also pointed to the mid-1980s price drop, which it linked to weaker demand and more non-OPEC production, and to the 2008 spike and subsequent fall during the global financial crisis. During the 2020 COVID lockdowns, oil demand collapsed and prices fell below $20 a barrel, Fortune reported.

This story draws on original reporting from Fortune.