The price of oil, or the oil price, generally refers to the spot price of a barrel () of benchmark crude oil—a reference price for buyers and sellers of crude oil such as West Texas Intermediate (WTI), Brent Crude, Dubai Crude, OPEC Reference Basket, Tapis crude, Bonny Light, Urals oil, Isthmus, and Western Canadian Select (WCS) among others. Oil prices are determined by global supply and demand, rather than any country's domestic production level, although the Organization of the Petroleum Exporting Countries (OPEC) cartel increases oil prices.
Through the years
Before oil, whale oil was used in lamps, as lubrication, etc. It was very expensive. In 1804, its price was $0.5/gallon or $21/barrel, which is $575 per barrel in 2025 dollars. Beginning in the 1850s, petroleum quickly replaced whale oil use.
The global price of crude oil was relatively consistent in the nineteenth century and early twentieth century. This changed in the 1970s, with a significant increase in the price of oil globally. There have been a number of structural drivers of global oil prices historically, including oil supply, demand, and storage shocks, and shocks to global economic growth affecting oil prices.
Notable events driving significant price fluctuations include the 1973 OPEC oil embargo targeting nations that had supported Israel during the Yom Kippur War, resulting in the 1973 oil crisis, the Iranian Revolution in the 1979 oil crisis, the 2008 financial crisis, and the 2010s oil glut that led to the "largest oil price declines in modern history" in 2014 to 2016. The 70% decline in global oil prices was "one of the three biggest declines since World War II, and the longest lasting since the supply-driven collapse of 1986." By 2015, the United States had become the third-largest producer of oil and resumed exporting oil upon repeal of its 40-year export ban.
Conflict The 2020 Russia–Saudi Arabia oil price war resulted in a 65% decline in global oil prices at the beginning of the COVID-19 pandemic. In 2021, the record-high energy prices were driven by a global surge in demand as the world recovered from the COVID-19 recession. By December 2021, an unexpected rebound in the demand for oil from United States, China and India, coupled with U.S. shale industry investors' "demands to hold the line on spending", has contributed to "tight" oil inventories globally. On 18 January 2022, as the price of Brent crude oil reached its highest since 2014—$88, concerns were raised about the rising cost of gasoline—which hit a record high in the United Kingdom.
In March 2026, international oil prices surpassed the $100 per barrel threshold for the first time since 2022, primarily driven by the outbreak of the 2026 Iran war. On 9 March, the brent crude benchmark surged to an intraday high of $119.50, a 29% increase, following strikes on energy infrastructure near Tehran and the effective closure of the Strait of Hormuz. Prices subsequently moderated to approximately $100 per barrel after G7 finance ministers announced a potential coordinated release of strategic petroleum reserves. During the crisis, Iranian officials suggested prices could exceed $200 per barrel if hostilities continued, while the United States executive branch characterized the price spike as a short-term consequence of regional security measures.
As of June 14, 2026, the conflict in the Strait of Hormuz has caused uncertainty in oil markets. According to The Economist magazine, refined oil prices are between 35 percent and 70 percent higher than before the war. "The International Energy Agency, an official forecaster, warns that the crunch will get much worse unless flows through Hormuz resume."
Structural drivers of global oil price According to Our World in Data, in the nineteenth and early twentieth century the global crude oil prices were "relatively consistent." In the 1970s, there was a "significant increase" in the price of oil globally, partially in response to the 1973 and 1979 oil crises. In 1980, globally averaged prices "spiked" to US$107.27.
Historically, there have been a number of factors affecting the global price of oil. These have included the Organization of Arab Petroleum Exporting Countries led by Saudi Arabia resulting in the 1973 oil crisis, the Iranian Revolution in the 1979 oil crisis, Iran–Iraq War (1980–88), the 1990 Invasion of Kuwait by Iraq, the 1991 Gulf War, the 1997 Asian financial crisis, the September 11 attacks, the 2002–03 national strike in Venezuela's state-owned oil company Petróleos de Venezuela, S.A. (PDVSA), Organization of the Petroleum Exporting Countries (OPEC), the 2008 financial crisis, OPEC's 2009 cut in oil production, the Arab Spring 2010s uprisings in Egypt and Libya, and the Syrian civil war (2011–24).
The 2013 oil supply glut that led to the "largest oil price declines in modern history" in 2014 to 2016. The 70% decline in global oil prices was "one of the three biggest declines since World War II, and the longest lasting since the supply-driven collapse of 1986."
By 2015 the United States was the 3rd-largest producer of oil moving from importer to exporter. The 2020 Russia–Saudi Arabia oil price war resulted in a 65% decline in global oil prices at the beginning of the COVID-19 pandemic.
Structural drivers affecting historical global oil prices include are "oil supply shocks, oil-market-specific demand shocks, storage demand shocks", "shocks to global economic growth", and "speculative demand for oil stocks above the ground".
Analyses of oil price fluctuations
Oil prices are determined by global forces of supply and demand, according to the classical economic model of price determination in microeconomics. The demand for oil is highly dependent on global macroeconomic conditions. According to the International Energy Agency, high oil prices generally have a large negative impact on global economic growth.
In 1974, in response to the previous year's oil crisis, the RAND Corporation presented a new economic model of the global oil market that included four sectors—"crude production, transportation, refining, and consumption of products"—analyzed separately for six regions: the United States, Canada, Latin America, Europe, the Middle East and Africa, and Asia. The study listed exogenous variables that can affect the price of oil: "regional supply and demand equations, the technology of refining, and government policy variables". Based on these exogenous variables, their proposed economic model would be able to determine the "levels of consumption, production, and price for each commodity in each region, the pattern of world trade flows, and the refinery capital structure and output in each region".
A system dynamics economic model of oil price determination "integrates various factors affecting" the dynamics of the price of oil, according to a 1992 European Journal of Operational Research article.
A widely cited 2008 The Review of Economics and Statistics article by Lutz Killian examined the extent to which "exogenous oil supply shocks"—such as the Iranian revolution (1978–1979), Iran–Iraq War (1980–1988), Persian Gulf War (1990–1991), Iraq War (2003), Civil unrest in Venezuela (2002–2003), and perhaps the Yom Kippur War/Arab oil embargo (1973–1974)"—explain changes in the price of oil." Killian stated that, by 2008, there was "widespread recognition" that "oil prices since 1973 must be considered endogenous with respect to global macroeconomic conditions".
Kilian added that these "standard theoretical models of the transmission of oil price shocks that maintain that everything else remains fixed, as the real price of imported crude oil increases, are misleading and must be replaced by models that allow for the endogenous determination of the price of oil." Killian found that there was "no evidence that the 1973–1974 and 2002–2003 oil supply shocks had a substantial impact on real growth in any G7 country, whereas the 1978–1979, 1980, and 1990–1991 shocks contributed to lower growth in at least some G7 countries."
A 2019 Bank of Canada (BOC) report described the usefulness of a structural vector autoregressive (SVAR) model for conditional forecasts of global GDP growth and oil consumption in relation to four types of oil shocks. The structural vector autoregressive model was proposed by the American econometrician and macroeconomist Christopher A. Sims in 1982 as an alternative statistical framework model for macroeconomists. According to the BOC report—using the SVAR model—"oil supply shocks were the dominant force during the 2014–15 oil price decline".
By 2016, despite improved understanding of oil markets, predicting oil price fluctuations remained a challenge for economists according to a 2016 article in the Journal of Economic Perspectives, which was based on an extensive review of academic literature by economists on "all major oil price fluctuations between 1973 and 2014".
A 2016 article in the Oxford Institute for Energy Studies describes how analysts offered differing views on why the price of oil had decreased 55% from "June 2014 to January 2015" following "four years of relative stability at around US$105 per barrel". A 2015 World Bank report said that the low prices "likely marks the end of the commodity supercycle that began in the early 2000s" and they expected prices to "remain low for a considerable period of time".
Goldman Sachs, for example, has called this structural shift the "New Oil Order"—created by the U.S. shale revolution. Goldman Sachs said that this structural shift was "reshaping global energy markets and bringing with it a new era of volatility" by "impacting markets, economies, industries and companies worldwide" and will keep the price of oil lower for a prolonged period. Others say that this cycle is like previous cycles and that prices will rise again.
A 2020 Energy Economics article confirmed that the "supply and demand of global crude oil and the financial market" continued to be the major factors that affected the global price of oil. The researchers, using a new Bayesian structural time series model, found that shale oil production continued to increase its impact on oil price but it remained "relatively small".
Benchmark pricing
Major benchmark references, or pricing markers, include Brent, WTI, the OPEC Reference Basket (ORB)—introduced on 16 June 2005 and is made up of Saharan Blend (from Algeria), Girassol (from Angola), Oriente (from Ecuador), Rabi Light (from Gabon), Iran Heavy (from Iran), Basra Light (from Iraq), Kuwait Export (from Kuwait), Es Sider (from Libya), Bonny Light (from Nigeria), Qatar Marine (from Qatar), Arab Light (from Saudi Arabia), Murban (from UAE), and Merey (from Venezuela), Dubai Crude, and Tapis Crude (from Malaysia).
In North America the benchmark price refers to the spot price of West Texas Intermediate (WTI), also known as Texas Light Sweet, a type of crude oil used as a benchmark in oil pricing and the underlying commodity of New York Mercantile Exchange's oil futures contracts. WTI is a light crude oil, lighter than Brent Crude oil. It contains about 0.24% sulfur, rating it a sweet crude, sweeter than Brent.
Its properties and production site make it ideal for being refined in the United States, mostly in the Midwest and Gulf Coast regions. WTI has an API gravity of around 39.6 (specific gravity approx. 0.827) per barrel (159 liters) of either WTI/light crude as traded on the New York Mercantile Exchange (NYMEX) for delivery at Cushing, Oklahoma. Cushing, Oklahoma, a major oil supply hub connecting oil suppliers to the Gulf Coast, has become the most significant trading hub for crude oil in North America.