Investment Corner: Why Is Oil Back Near $100 a Barrel—and What Does It Mean for Investors?

Why is oil back near $100 per barrel?

Oil has been a major focal point, with Brent crude briefly closing above $100 a barrel recently, driven by continuing geopolitical tensions in the Middle East.

For long-term investors, energy price spikes matter because they ripple through the entire economy, affecting inflation, consumer spending, and central bank policy. Here are some key factors to consider:

• The original challenge for oil was that the Strait of Hormuz, where roughly 20% of global oil shipments pass through, was closed due to the war in Iran. In recent days, however, another important waterway has come under threat. This is the Bab al-Mandeb Strait in the Red Sea, where a militant group known as the Houthis out of Yemen have attacked Saudi Arabian oil shipments.

  
  

• In addition, prior peace talks and a Memorandum of Understanding (MOU) between the U.S. and Iran have failed to create a lasting ceasefire. Attacks have picked up, raising new concerns about the state of the region. This translates directly into oil prices, amplifying these other effects.

  
  

• Energy costs had begun to fall since oil prices had declined the prior two months. With Brent crude back toward $100 per barrel, and WTI back around $90, this could once again feed into fuel prices and inflation measures. The Consumer Price Index for June had shown improvement, with year-over-year inflation of 3.5%, energy prices up 15.7%, and gasoline up 26.7% - both decelerations from previous months. Core CPI (which strips out food and energy) rose only 2.6%.

  
  

• All of this complicates the outlook for the Fed. Its June projections showed PCE inflation rising to 3.6% for the year, and markets are now pricing in a greater chance of rates moving higher rather than holding steady.

  
  

• That said, it's important to keep all of this in perspective. Oil prices have been extremely volatile the past few months, and in some cases have fallen as quickly as they have risen. So, it's important to not overreact to these swings.

This chart shows how oil prices and the broader stock market interact, which is very relevant here given the current supply disruptions and their economic impact. While these near-term pressures are real, history shows that disciplined, long-term investors who stay focused on their financial goals tend to navigate periods of volatility and uncertainty far better than those who react to short-term events.

While oil prices, inflation, and geopolitical events can create uncertainty in the markets, they don't have to derail your financial plan. If you have questions about how today's economic environment may affect your investments, retirement plan, or long-term goals, don't navigate it alone. Reach out to your Whitaker-Myers Wealth Managers financial advisor—or connect with one of the experienced advisors on our team—for personalized guidance designed to help you stay focused, informed, and confident through every market cycle.