Oil Tops $105 as Washington Reopens Arctic Drilling

WASHINGTON — Brent crude rose to $105.82 per barrel during morning trading at 9:15 a.m. Eastern Time. The international benchmark gained 62 cents from the previous day’s price of $105.20, a 0.58% daily increase.

The longer-term move is sharper. Crude prices have climbed 16.74% from $90.64 one month ago and surged 58.91% from the $66.59-per-barrel price recorded at the same time last year.

The rise has intensified the domestic debate over long-term energy security and helped drive a sweeping regulatory shift in Washington. The Trump administration has moved to reopen more than 1.5 million acres in the Coastal Plain of the Arctic National Wildlife Refuge (ANWR) for oil and gas leasing, seeking to increase domestic supply and insulate the U.S. economy from overseas market volatility.

The action reverses a Biden administration policy that restricted Arctic drilling. The northeastern Alaska region, known as the “1002 Area,” has been at the center of a political battle since the late 1970s. Proponents say the estimated billions of barrels of oil beneath the refuge are important for national security and price stabilization.

Opponents, including environmental organizations and Gwich’in indigenous groups, argue that industrial development would permanently disrupt habitats critical to caribou, polar bears, and migratory birds.

Crude oil is the single largest component of the retail cost of gasoline, so price spikes on global exchanges reach consumers at the pump almost immediately. Retail fuel prices, however, do not move in perfect symmetry with crude markets.

Economists call this pattern the “rockets and feathers” phenomenon. When crude prices spike, stations generally increase prices immediately—like a rocket—to cover anticipated higher costs for replenishing underground tanks. When crude prices fall, gasoline prices usually decline slowly—like a feather—as station owners seek to preserve profit margins and hedge against future market volatility.

Refining expenses, distribution logistics, marketing, and federal and state taxes also determine retail gasoline prices. Higher oil costs extend beyond transportation fuel: agricultural machinery, long-haul trucking, and container ships depend heavily on diesel and maritime fuel, raising the wholesale cost of food and retail items before they reach store shelves.

Over the past two decades, horizontal drilling and hydraulic fracturing, commonly known as fracking, have enabled the U.S. to tap vast reserves of tight oil trapped in shale rock formations. Major shale plays include the Permian Basin in West Texas and New Mexico, the Bakken Formation in North Dakota, and the Eagle Ford Group in Texas.

Those formations helped make the United States the world’s leading crude oil producer. When U.S. shale operators increase output, the resulting supply surge limits the ability of international cartels to artificially inflate prices and provides a critical buffer against production cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC+).

Energy markets follow the movement of crude through two primary benchmarks. Brent Crude, sourced primarily from oil fields in the North Sea, is the main benchmark for international crude purchases. Because it is waterborne and easily shipped worldwide, the U.S. Energy Information Administration (EIA) uses Brent as its baseline reference in its Annual Energy Outlook for projecting global trends.

West Texas Intermediate (WTI), sourced primarily from U.S. oil fields and traded through the pipeline hub of Cushing, Oklahoma, is the standard benchmark for North American domestic oil. WTI futures briefly traded at negative prices in 2020, when the COVID-19 pandemic and international lockdowns caused a historic collapse in transport and industrial demand.

The Strategic Petroleum Reserve (SPR) is the federal government’s primary defensive tool when geopolitical shocks or natural disasters disrupt supply chains. Created under the Energy Policy and Conservation Act of 1975 after the disruptive 1973–1974 Arab oil embargo, it consists of massive underground salt caverns along the Gulf Coast in Texas and Louisiana.

The SPR can hold hundreds of millions of barrels of crude oil. A presidential directive can release that supply cushion to prevent severe economic disruptions. During the global energy crisis of 2022, the federal government authorized the largest sale in the reserve’s history, releasing 180 million barrels after Russia’s invasion of Ukraine.

The release provided short-term relief to consumers and helped maintain critical services such as public transportation and emergency logistics. Drawdowns also reduce the nation’s emergency reserves, requiring replenishment when market prices cool.

Crude oil and natural gas remain closely linked across the industrial economy. When oil prices stay elevated, heavy industries and power-generation facilities capable of dual-fuel operations often switch to natural gas where technically feasible. That substitution increases demand for natural gas and raises utility and heating costs for businesses and residential consumers alike.

The resulting energy costs also feed broader economic inflation. High oil prices increase shipping and logistics expenses for virtually all consumer goods. A historical pattern of geopolitical conflict and macroeconomic shifts has repeatedly produced extreme scarcity and sudden oversupply.

In 1973, the Yom Kippur War triggered an OPEC oil embargo against the United States and other Western nations. Crude prices quadrupled, and widespread fuel rationing followed. By the mid-1980s, conservation efforts, declining industrial demand, and rising non-OPEC production in the North Sea and Alaska contributed to a massive oil glut and collapsing prices.

In 2008, rapid industrialization in emerging markets pushed crude above $147 per barrel, an all-time record high at the time. Prices crashed later that year after the global financial crisis severely reduced industrial activity.

In 2020, Brent dropped below $20 per barrel before production cuts and economic reopenings initiated the current multi-year rally.