Brent Crude Surges Past $110 as U.S. Fuel Pressure Builds

**WASHINGTON** — Brent crude traded at $110.42 per barrel as of 9 a.m. Eastern Time today, up 79 cents, or 0.72%, from yesterday morning’s rate of $109.63. The sustained surge in global energy markets is intensifying pressure on U.S. retail fuel markets and fueling debates over domestic drilling policy.

The international benchmark stood at $89.25 one month ago, marking a 23.71% increase in 30 days. Over the past year, Brent has climbed approximately $43.30 per barrel from $67.16, a 64.41% annual increase.

Crude oil typically accounts for more than half of the retail price of a gallon of gasoline. Refining processes, transport logistics, wholesaling margins, local retail markups, and federal, state, and local taxes make up the remaining portion.

Brent crude is sourced primarily from oilfields in the North Sea and prices roughly two-thirds of the world’s internationally traded crude. The U.S. Energy Information Administration (EIA) uses Brent as its primary reference point when modeling international energy trends in its Annual Energy Outlook.

Retail gasoline prices historically rise almost immediately when crude prices spike on international exchanges. When crude prices fall, however, pump prices usually decline much more slowly. Economists call this asymmetric pricing pattern the “rockets and feathers” effect.

The “rocket” phase occurs when retailers quickly increase prices to cover the higher replacement cost of their next wholesale fuel delivery. During the “feather” phase, retailers may delay reductions when crude falls to preserve profit margins and hedge against sudden future market reversals.

West Texas Intermediate (WTI) is the primary benchmark for North America. Extracted largely from U.S. shale fields and oil basins, WTI is mainly routed to and priced at the physical trading hub in Cushing, Oklahoma. It is historically lighter and sweeter than Brent, although local pipeline logistics and domestic production levels can cause the two benchmarks to diverge and create a pricing spread.

The oil market has repeatedly responded sharply to systemic shocks. During the 1973 Yom Kippur War, Arab members of the Organization of the Petroleum Exporting Countries (OPEC) imposed an oil embargo on the United States and other Western nations, producing severe domestic fuel shortages and sharply higher prices.

The mid-1980s brought the opposite outcome. Slowing economic activity in industrial nations and rapidly expanding non-OPEC production in areas including the North Sea and Alaska contributed to an “oil glut” that caused prices to collapse and weakened OPEC’s market control.

OPEC+ now remains central to global supply decisions. The coalition was formed in late 2016 and combines the 12 core OPEC member states with external producers, most notably Russia. By changing collective production quotas, OPEC+ exercises substantial control over global oil inventories and market direction.

The price shocks of 2008 followed rapid economic expansion in developing markets, which drove crude to an all-time record high of more than $147 a barrel in July. The global financial crisis then caused a catastrophic collapse in demand, sending prices below $40 a barrel by the end of that year.

During the initial onset of the COVID-19 pandemic in early 2020, government-mandated lockdowns virtually halted global travel. The unprecedented drop in demand briefly pushed WTI futures into negative pricing territory for the first time in history, while Brent fell below $20 per barrel.

The federal government maintains the U.S. Strategic Petroleum Reserve (SPR) to mitigate severe supply disruptions and protect the domestic economy from price shocks. Established under the Energy Policy and Conservation Act of 1975 after the Arab oil embargo, the SPR has an authorized capacity of up to 714 million barrels of crude oil.

The reserves are stored in massive underground salt caverns at four heavily guarded sites along the Gulf Coast of Texas and Louisiana: Freeport and Bryan Mound in Texas, and West Hackberry and Bayou Choctaw in Louisiana. The SPR is intended as an emergency buffer rather than a long-term economic price-control mechanism.

Administrations have periodically authorized emergency drawdowns. In 2022, a historic release of 180 million barrels was authorized to stabilize markets after supply disruptions caused by Russia’s invasion of Ukraine.

Long-term supply levels are also shaped by domestic drilling policy. In a major policy pivot, the Trump administration moved to reopen more than 1.5 million acres of the Coastal Plain within the Arctic National Wildlife Refuge (ANWR) in Alaska for oil and gas leasing.

The action reversed a Biden administration policy that had restricted Arctic drilling because of environmental concerns. Proponents of the ANWR leasing program argue that developing the vast Alaskan reserves will strengthen national energy security and put downward pressure on global prices. Opponents cite the ecological impact on fragile Arctic habitats.

The modern U.S. energy landscape has been reshaped by the shale revolution. Over the last two decades, advances in horizontal drilling and hydraulic fracturing (fracking) unlocked massive crude and natural gas reserves trapped in tight rock formations, including the Permian Basin in Texas and New Mexico and the Bakken Formation in North Dakota.

The resulting increase in shale production made the United States the world’s top crude producer and created a vital supply buffer that tempers global price spikes. High oil prices can also produce substitution effects: industrial operations with dual-fuel capabilities may switch from oil to natural gas where possible, increasing demand for and pricing of natural gas.

Oil prices affect inflation because crude is the primary fuel for maritime shipping, commercial trucking, and rail transportation. Higher crude prices increase the cost of moving raw materials and finished goods, and those logistics costs are passed to consumers.

The result includes higher headline inflation, which measures overall consumer costs, including volatile food and energy sectors, as well as higher prices for everyday items on grocery store shelves.