On 7 January 2026, a barrel of Brent crude cost $61.08. On 7 April, after war disrupted shipping through the Strait of Hormuz, it cost $138.21. On 29 September, it was $113.96. A US gallon of petrol cost $4.47 that week, against $3.12 a year earlier.
Here is how the oil market works: who produces and uses it, how its price is set and what moved it in 2026.
How does the oil market work? Producers pump crude oil. Refiners turn it into petrol, diesel and jet fuel. Traders buy and sell crude and futures contracts in between. The price is set in London and New York, through two benchmark crudes: Brent and WTI.
The world used about 104 million barrels a day in 2025. The US was the largest producer, at a record 13.6 million.
About 20 million barrels a day passed through the Strait of Hormuz in 2024. That is about a fifth of the world's oil use.
On 25 September 2026, Brent cost $30.78 more than WTI. Apart from April 2020, that was the widest gap in daily data going back to 1987.
Who is in the oil market
Four groups make up the market:
Producers. The US produced a record 13.6 million barrels a day in 2025, according to the US Energy Information Administration (EIA). Russia produced 9.9 million and Saudi Arabia 9.6 million.
Refiners. Crude has few uses as it comes out of the ground. Refineries split it into petrol, diesel, jet fuel and other products.
Traders. Oil companies, trading houses, banks and funds buy and sell crude, products and futures. Some move physical cargoes. Others only take a view on the price.
Consumers. Drivers, airlines, shipping lines, factories and power plants. The world used 104.3 million barrels a day in 2025, by the EIA's estimate.
OPEC, a group of oil-exporting countries whose largest producer is Saudi Arabia, coordinates output with Russia and other allies as OPEC+. Its members can raise or cut production to steer the price.
Brent and WTI: the two benchmarks
Crude is not one product. Each oilfield's crude differs in weight and sulphur content. So the market prices most crude against two benchmarks:
Brent comes from the North Sea and is traded in London. It is the main international benchmark.
West Texas Intermediate (WTI) is US crude, delivered at Cushing, Oklahoma. It trades in New York.
Both trade as futures, contracts to buy or sell oil at a set price on a future date. The futures price feeds into the price of physical cargoes.
Source: FRED (DCOILBRENTEU, DCOILWTICO); YX Insights
The chart shows both since 2000. A few moments stand out:
3 July 2008: WTI peaked at $145.31.
20 April 2020: WTI fell to −$36.98. With storage at Cushing almost full in the pandemic, holders of the expiring contract paid buyers to take the oil.
8 March 2022: Brent hit $133.18 after Russia invaded Ukraine.
7 April 2026: Brent hit $138.21 during the Hormuz crisis.
What moves the oil price
Supply shocks. Any threat to a big producer or route moves the price fast. About 20 million barrels a day passed through the Strait of Hormuz in 2024, around 20% of world consumption. In March 2026, war with Iran disrupted that traffic. WTI rose more than 35% in one week.
Producer decisions. OPEC+ output targets add or remove millions of barrels a day.
Demand. Oil use rises with economic growth. It fell sharply in the 2020 lockdowns and the 2008 recession.
The dollar. Oil is priced in dollars, so a stronger dollar makes it dearer in other currencies.
Stocks in storage. The EIA publishes US inventories every Wednesday. Bigger stocks than expected tend to push prices down.
The 2026 shock and the Brent-WTI gap
Source: FRED (DCOILBRENTEU, DCOILWTICO); YX Insights
Brent usually costs a few dollars more than WTI. From 2015 to 2025, the gap averaged $4.05 a barrel.
In 2026, it blew out. Brent tracks seaborne crude traded worldwide, including cargoes that compete with Gulf supply. WTI is priced on US crude, which kept flowing. Talk of US curbs on diesel exports also weighed on WTI in September. On 25 September 2026, Brent spot cost $116.01 and WTI $85.23, a gap of $30.78. Leaving out the days around April 2020, that is the widest gap in the EIA's daily data, which go back to 1987.
The EIA expects flows from the Middle East to stay limited through the end of 2026, with about 5.7 million barrels a day shut in during the fourth quarter.
Why the oil price matters to investors
Inflation. Energy is 7.3% of the US CPI basket. In August 2026, energy prices were 16.3% higher than a year earlier, which pushed headline inflation above core. We explain the difference in Core vs Headline Inflation.
Interest rates. Higher inflation can keep central banks raising rates, as we explain in Interest Rates and Inflation.
Shares. A higher price tends to help oil producers and hurt airlines and other heavy users.
Oil is priced through two benchmarks. Its biggest moves have come from supply shocks. When a route like Hormuz is disrupted, the price can double within months.
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