Oil surges to $110 per barrel for the first time since May

A key oil price benchmark surged Friday to its highest level in five months, as investors assessed the impact of both the Iran and Ukraine-Russia wars on global energy supplies. Brent crude oil, widely considered to be among the most important prices in global energy, surpassed $110 per barrel shortly after 2:30 p.m. ET, its highest level since May. U.S. crude oil, which also steers gas prices, jumped 3.5% Friday to close at $101.41 per barrel. It was the first time West Texas Intermediate crude had crossed the $100 threshold, closely watched by both traders and the public, since September. 

Friday’s price jumps will likely add to already elevated gasoline prices for U.S. consumers in coming days. As of Friday morning, regular gasoline averaged $4.32 per gallon nationwide. Diesel futures also jumped by more than 1% Friday. The cost of this commercial fuel critical for farming and other industrial sectors has risen even faster than regular gasoline in recent months. 

Stocks fell Friday, partly in response to the jump in energy prices. The S&P 500 fell more than 1% while the Nasdaq Composite sharply dropped 2% by midafternoon. The price of fuel around the world began its steady rise this spring, when the U.S. and Israel attacked Iran in late February, prompting the closure of the Strait of Hormuz. But an escalation in the Russia-Ukraine war in recent months has caused an even more dramatic price spike for diesel. Russia has traditionally been one of the world’s largest diesel exporters.

 But attack by Ukrainian forces on its energy infrastructure has taken much of its refining capacity offline. Likewise, energy assets in Ukraine have been targeted by Russian strikes. As a result of the strikes, buyers of Russian diesel have been forced to look elsewhere for their fuel supplies. But there aren’t any clear opportunities to easily expand diesel production. 

Refineries in the U.S. and Europe are already running at nearly maximum capacity to churn out as much diesel fuel as possible. President Donald Trump is intensely focused on the high cost of diesel fuel because of its key role in driving up inflation -- a top issue for American voters in the Nov. 3 midterm elections. Trump has pressured U.S. allies to release some of their diesel and crude oil reserves, and he recently signed an order to ease regulations on the use of off-road “red dye” diesel.