What could oil at $100 per barrel mean for markets?

The US and Israeli military intervention in Iran has led to a significant increase in oil prices.  

What does this price hike and any potential move higher – like the $100 per barrel price seen after Russia’s invasion of Ukraine – mean for markets and your money? From how much you pay to fill up your car to the impact on equities as a whole and oil-related investments.

Natural gas prices, which are more fragmented and localised, have also spiked in response to the conflict in the Middle East – in some cases much more than oil. This is partly thanks to the impact of the conflict on Qatar, one of the largest producers of liquefied natural gas (LNG).  

The disruption to gas supplies arising from Russia’s invasion of Ukraine in 2022 made Qatari LNG increasingly important – particularly in Asia.

What is the impact?

Putting the world of investments to one side, a higher oil price will result in a higher price at the pump.  

Oil is refined to make petrol and diesel. Typically, there is a couple of weeks lag between changes in the wholesale price and what you pay at the forecourt as fuel moves through the supply chain.  

But the knock-on effect consumers could feel is greater than just petrol prices, with around 40% of the world’s plastic produced from crude oil – affecting the cost of everything from packaging to toys, garden furniture and more. The remainder is mainly produced using byproducts from coal and natural gas.  

Also, as businesses face their own higher energy costs, they tend to pass this on in the form of higher prices for the goods and services they provide. This is why higher energy prices are sometimes described as a tax on economic growth.

Additionally, rising energy prices increase the prospect of an uptick in inflation which in turn would affect the trajectory of interest rates. Higher rates are typically bad news for equity markets because they tend to increase the appeal of lower-risk options like bonds and cash and mean higher borrowing rates for companies.  

What could push oil prices above $100 per barrel?

Further disruption to energy infrastructure in the Middle East and a prolonged blockage of the Strait of Hormuz, through which a large proportion of the world’s oil and LNG passes, could see oil prices move higher from here.

In February 2022, oil surged above $100 per barrel a matter of days after Russia invaded Ukraine, eventually peaking above $130 per barrel.

Prices had risen steadily since the start of 2022; amid a combination of rebounding demand coming out of the pandemic and supply shortfalls but also in response to the mounting tensions between Russia and Ukraine in the weeks leading up to the invasion. Again in 2026 there had been an uptick in oil before the US-Israeli strikes on Iran, albeit to a lesser extent.  

What are investors’ options if they want to invest in oil?

It is important to remember that the oil price can be extremely volatile, even compared with other commodities, so direct exposure will not suit most investors.  

It’s possible to buy products which track the price of oil. However, these products typically do not buy physical oil (thanks to the cost and practical implications of storing it) and instead invest in futures contracts. Complexities and outgoings associated with doing so can dilute exposure to oil, particularly over the longer term.

An alternative is to look at trackers and actively managed funds which hold a basket of oil and gas companies or the individual companies themselves – with BP and Shell two large UK-listed examples. As well as producing a significant quantity of oil, Shell has a substantial LNG business.  

The heavy weighting of BP and Shell in the FTSE 100 index means anyone with a standard UK tracker has meaningful exposure to the energy sector already. In the FTSE 100 the weighting is 8.4% compared with just 3.7% for the MSCI World, for example (both as of the 30 January 2026).