Will oil prices go up?

No one can say for sure where oil prices will go next. Many forces shape the market—but at the core, it’s still about supply and demand. When risks like a potential recession or war ramp up, oil prices can change direction quickly.

How oil prices translate to gas pump prices

When you buy gas at the pump, you’re covering more than the cost of crude oil. You’re also paying for every step in the process, including refineries, wholesalers, taxes, and the markup your local gas station adds.

Even so, crude oil has the biggest influence on what you pay, often making up more than half the cost per gallon. When oil prices jump, gas prices usually climb right along with them. But when oil falls, gas prices often slip much more slowly—a pattern sometimes called “rockets and feathers.”

The role of the U.S. Strategic Petroleum Reserve

If an emergency hits, the U.S. keeps a backup supply of crude oil called the Strategic Petroleum Reserve. It’s mainly there to protect energy security during crises, such as sanctions, catastrophic storm damage, even war. It can also help cushion the blow when supply shocks send prices soaring.

It’s not meant to solve long-term problems. Instead, it provides quick relief for consumers and helps keep vital parts of the economy moving, like essential industries, emergency services, and public transit.

How oil and natural gas prices are linked

Oil and natural gas are two of the world’s primary energy sources. A big change in oil prices can affect natural gas by extension. For example, if oil prices increase, some industries may swap natural gas for some segments of their operations where possible, which which increases demand for natural gas.

Historical performance of oil

When looking at how oil performs, two main benchmarks stand out:

• Brent crude oil is the main global oil benchmark.
• West Texas Intermediate (WTI) is the main benchmark of North America.

Of the two, Brent gives a better picture of global oil performance because it prices a large share of the world’s traded crude. It’s also the go-to for tracking oil’s historical trends. In fact, even the U.S. Energy Information Administration now relies on Brent as its primary reference in its Annual Energy Outlook.

If you look at the Brent benchmark over several decades, oil has been far from stable. It has experienced sharp rises tied to wars and supply cuts, along with steep drops linked to global recessions and oversupply (called a “glut”). For example:

• The early 1970s delivered the first major oil shock when the Middle East slashed exports and placed an embargo on the U.S. and others during the Yom Kippur War.
• Prices fell in the mid-1980s due to lower demand and an influx of non-OPEC oil producers joining the market.
• Prices surged again in 2008 as global demand grew, but then crashed alongside the global financial crisis.
• During the 2020 COVID lockdown, oil demand plummeted like never before—pushing prices below $20 per barrel.

To sum up, oil’s historical performance has been anything but smooth. Again, it’s heavily influenced by wars, recessions, OPEC whims, shifting energy policies, and much more.

Energy coverage from Fortune

Looking to stay up-to-date regarding the latest energy developments? Check out our recent coverage:

Frequently asked questions

AMD (AMD +1.10%) and Nvidia (NVDA +1.49%) are recognized as two of the top computing unit manufacturers in the AI arms race. While Nvidia got off to a hot start and dominated the initial build-out, AMD has made up some ground recently, although Nvidia still holds a far lead.

Unless you’re familiar with the computing industry, determining which company has the best technology may not be easy. To determine which products are best, sometimes finding a smart voice in the industry is the best approach.

One of the most highly regarded minds in the world is Elon Musk, CEO of both Tesla and Space Exploration Technologies. Both companies are spending heavily on computing infrastructure: Tesla is training its self-driving vehicles on countless hours of recorded driving footage, and SpaceX owns xAI, the maker of the Grok large language model.

Musk knows a thing or two about which computing units he prefers his companies to use, and he just gave a glowing endorsement to one of these two firms.

Musk prefers his companies to use Nvidia products

During SpaceX’s Q2 conference call, Musk stated:

And going forward, we’ve decided to build exclusively on Nvidia because we think the Vera Rubin architecture is the best architecture . We think it’s the best AI computer, and we greatly value our close cooperation and partnership on many levels with Nvidia. So, we’re exclusive to Nvidia.

That’s a pretty definitive quote, but what may be lost in that announcement is how impressive Nvidia’s next-generation hardware will be. Currently, all the AI breakthroughs and advancements we’ve seen are on the Hopper or Blackwell architectures. Compared to Blackwell architecture, Rubin provides a tenfold reduction in inference token cost and a fourfold decrease in the number of GPUs required to train an AI model. Rubin GPUs will be more efficient, so AI firms could accomplish the same amount of work with fewer GPUs. But what will most likely happen is that firms will deploy the same number of GPUs to increase computing capacity and lower the cost per unit of work.

Today’s Change

(1.49%) $3.23

Current Price

$220.78

Key Data Points

Market Cap

$5.3TMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day’s Range

$216.21 – $221.30

52wk Range

$164.07 – $236.54

Volume

124.7M

Avg Vol

140M

Gross Margin

74.67%

Dividend Yield

0.13%