⚡ Energy

Background: why this matters

Energy is the foundation everything else runs on: farming, fertiliser, shipping, heating, water pumping, hospitals and data centres. Oil is still the world's largest single source of primary energy, according to the Energy Institute's Statistical Review of World Energy. It moves almost all freight and aviation, so the price of crude oil is the fastest-moving barometer of global energy stress. Sharp price spikes have come before or alongside several major recessions and have fed food-price crises and political unrest.

History offers clear precedents. The 1973 Arab oil embargo roughly quadrupled oil prices and triggered a global recession. The 1979 Iranian revolution caused a second shock. Brent reached its record daily close of about $144 per barrel in July 2008, just before the financial crisis. In 2020 the pandemic crushed demand so hard that US oil futures briefly traded below zero in April. After Russia's invasion of Ukraine in 2022, Brent rose to about $133 in March and Europe faced a natural-gas crisis. All of these are visible in the chart above.

Much of the world's oil passes through a few narrow sea lanes. The U.S. Energy Information Administration estimates that about a fifth of global oil consumption moves through the Strait of Hormuz. That is why conflict in the Gulf, attacks on shipping in the Red Sea, or sanctions on major producers show up in prices within hours. Decisions by OPEC+, the group of oil-exporting countries led by Saudi Arabia and Russia, also move the market.

Price alone doesn't measure how secure energy supplies are. Low prices can reflect a weak economy, and some price increases are just inflation. The long-term picture is also changing: solar, wind and batteries are growing quickly, and the IEA expects oil demand to plateau in the coming years. For now, though, a sudden jump in Brent is still the clearest real-time signal that the world's energy system is under strain.

What analysts watch: shipping through the Strait of Hormuz, the Red Sea and other chokepoints; OPEC+ production decisions; commercial and strategic inventories; sanctions on Russia, Iran and Venezuela; demand from China; and the pace of the shift to electricity.