Oil prices have surged past a critical threshold once again. The US benchmark West Texas Intermediate crude has climbed above $100 per barrel after the United States launched a military attack against major crude producer Iran.
The latest spike highlights how sensitive energy markets remain to geopolitical shocks. Just two months ago, oil was trading at $55.99. Now prices are within striking distance of $110, only 11 cents away at one point during trading.
Such sharp moves are not new. Oil has experienced dramatic swings over the past two decades as wars, economic crises and global demand shocks reshape the market.
An examination of major turning points in oil prices shows how global events repeatedly send the commodity soaring or crashing.
Russia’s invasion of Ukraine pushed oil above $100 in 2022
The last time crude prices crossed the $100 mark was in February 2022. That surge came shortly after Russia invaded Ukraine. Russia is one of the world’s largest producers of oil and gas.
Markets immediately feared that Western sanctions on Moscow would disrupt global supplies. Prices rose rapidly. By March 2022, Brent crude was nearing its 2008 record, reaching $139.13 per barrel. The US benchmark West Texas Intermediate reached $130.50.
The rally lasted several months. Demand was recovering as the world emerged from the pandemic. At the same time, sanctions on Russia tightened supply in global markets.
Oil prices remained largely above $100 until the summer of 2022 before gradually falling back as supply increased.
The Covid-19 pandemic triggered a historic market collapse in 2020
Only two years earlier, oil markets experienced one of the most dramatic crashes in financial history.
The coronavirus pandemic shut down global travel, closed offices and factories, and grounded airlines worldwide. Demand for fuel collapsed almost overnight.
Storage facilities quickly filled up as producers continued pumping oil despite the fall in consumption. At the same time, a price war between Saudi Arabia and Russia added to the supply glut.
In April 2020, US benchmark crude briefly plunged into negative territory. West Texas Intermediate fell to minus $40.32 per barrel. Producers were effectively paying buyers to take oil off their hands.
Brent crude also collapsed, dropping to a record low of $15.98.
The unprecedented crash exposed the vulnerability of energy markets to sudden demand shocks.
Sanctions on Iran drove oil back above $100 in 2012
Another major price surge occurred a decade earlier. In 2012, Western powers imposed sweeping sanctions on Iran aimed at halting its nuclear programme.
The measures targeted Iran’s crude exports and significantly reduced supplies in global markets. Oil prices rose back above $100 per barrel after previously falling below $90 during the eurozone economic crisis.
At the same time, wider tensions in the Middle East were rising. The conflict in Syria and broader regional instability kept markets on edge.
Prices remained above $100 for much of the period until 2014. They then collapsed as a surge in US shale production flooded global markets. By early 2015, crude had fallen below $50 per barrel.
Arab Spring unrest sent markets surging in 2011
Geopolitical instability had already shaken oil markets the year before.
In 2011, the Arab Spring uprisings swept across the Middle East and North Africa. Long-standing leaders were toppled in Tunisia, Egypt and Yemen.
Unrest also spread to Libya, a major oil producer. Concerns over supply disruptions drove prices sharply higher.
Brent crude surged to $127 per barrel in March 2011 during the height of the turmoil.
Energy traders feared that instability could spread to other major producers in the region.
Oil hit a record high of $147 in 2008
The biggest price spike in modern oil market history occurred in 2008.
On July 11 that year, Brent crude reached an all-time record of $147.50 per barrel. On the same day, West Texas Intermediate hit $147.27.
Several factors drove the surge. US stockpiles were declining and demand from China and other emerging economies was rising rapidly.
At the same time, tensions in key Opec producers such as Iran and Nigeria created concerns about supply disruptions.
A weaker US dollar also supported the rally. Oil is priced in dollars, so a weaker currency makes crude cheaper for buyers using other currencies.
The rally did not last long. The global financial crisis triggered a severe economic downturn and demand for energy collapsed.
By December 2008, Brent crude had plunged to around $36 per barrel.
Why oil markets remain highly volatile
The latest surge above $100 once again highlights the connection between geopolitics and energy prices.
Oil remains one of the most strategically important commodities in the global economy. Disruptions in supply from major producers can quickly ripple across financial markets.
Higher oil prices also feed directly into inflation. They raise transportation and production costs for businesses and increase fuel bills for consumers.
This makes oil movements closely watched by central banks, investors and governments.
With tensions involving Iran now pushing crude higher again, traders around the world are watching closely. The next move in oil prices could have far-reaching consequences for global inflation, currency markets and economic growth.
