Russia’s invasion of Ukraine has driven up the cost of oil more than 60% from six months ago. And the reliance of the United States on fossil fuels has left families footing the bill for higher gas prices, while oil producers make record profits.

A handful of oil-producing countries, including Russia and Saudi Arabia, dominate the oil market and have pushed up prices at the pump, which hurts workers, families and small businesses. Domestic oil producers and shareholders are reaping the rewards of the recent rise in crude oil and gas prices with record profits and stock buybacks.

The Biden administration has taken action by supplying one million additional barrels of oil per day for the next six months from the U.S. Strategic Petroleum Reserve (SPR). Oil production in the United States has more than doubled since the last time oil prices spiked and now exceeds domestic consumption, but U.S. families are still subjected to global prices for oil. Public investments in clean energy are necessary to transition to true energy independence and bring down costs for families, as they shield families from price volatility and protect the environment.

The global oil market lacks competition and is dominated by countries like Russia and Saudi Arabia

More than half of the world’s total crude oil is produced by nations that have banded together to exert power over the international market. Although the United States is the single largest producer of crude oil in the world, the 13 countries that comprise the Organization of Petroleum Exporting Countries (OPEC) have much more influence on oil prices. And since 2016, a Russia-led group of 10 countries has coordinated production with OPEC, giving this combined block, known as OPEC+, control of roughly 50% of the world’s oil production. OPEC+ is the largest and most important global supply-side driver of oil prices; because it openly manipulates supply, it has the power to substantially affect oil prices.

Russia is tied with Saudi Arabia as the second-largest oil producer, and Russia and Saudi Arabia are the largest producers in OPEC+. Saudi Arabia’s influence in OPEC+, and thus its power to influence oil prices on the global market, stems from its majority ownership stake in the world’s largest oil-producing company, Saudi Aramco. This overwhelmingly state-owned company produces more than twice as much as its closest competitor.  

In 2020, Saudi Arabia played a leading role in the decision of OPEC+ to dramatically cut oil production in response to the coronavirus pandemic and ensuing fall in demand. In 2021, a swift recovery in demand and limited oil supply pushed up oil prices around the world, and Saudi Aramco more than doubled its profits, overtaking Apple as the world’s most valuable company.

The oil market remains sensitive to global disruptions and shocks like Putin’s invasion of Ukraine

Oil is traded and shipped worldwide. This globally integrated market means any disturbances in oil production can create price shocks around the world. High oil dependence leaves economies vulnerable to these shocks, with widespread impacts on households and businesses.