There are multiple reasons for this, ranging from oil at that price being broadly in line with its inflation-adjusted average over the past decade, to the global economy’s lower dependence on oil per unit of GDP, improved energy efficiency, stronger alternative energy investment, and more oil-resilient markets.

That does not mean oil at $100 a barrel is comfortable for consumers or that this will not have political and economic consequences. It still raises fuel bills, transport costs, food prices, and manufacturing expenses.

But in 2026, the global economy is better able to absorb that pressure than it was during earlier energy crises.

Beyond the inflation point, one reason for this is efficiency. The world now uses much less oil to produce each unit of economic output. Over the past 50 years, the amount of oil needed to generate $1 of global GDP has fallen very steeply.

A study from the Centre for Global Energy at Columbia found, for example, that, “The efficiency of oil use has improved, in other words oil intensity has declined, over the years and decades. In 1973, for example, when oil intensity was at its zenith, the world used a little less than one barrel of oil to produce $1 000 worth of GDP. By 2019 global oil intensity was 0.43 barrel per $1 000 of global GDP — a 56% decline”.

A further reason is that the growth shock threshold appears to be much higher than $100. Oil would likely need to move closer to $150 per barrel before it created a macroeconomic shock comparable to the great energy crises of the past.

That oil prices have tended to hold at near $100 explains why global growth forecasts are overall only slightly lower than their pre-Iran war estimates.

Stock markets have, for example, held up with resilience despite the oil price at times testing $110, as investors see strong corporate earnings elsewhere, especially in technology and other high-growth sectors. Energy is still very important, but it no longer dominates market psychology in the way it once did.

There is also a supply-side argument. A $100 price gives producers enough incentive to invest in exploration and production, which drives new sources of economic growth and investment that benefit an economy. Countries with very welcoming investment and energy regulatory regimes can do very well from this, while those with more restrictive licensing, tax, and environmental regimes lose out.

South Africa is regrettably a case study of this problem, with suspected vast oil and gas reserves but a regulatory regime that freezes out investment.

The political danger for governments is perhaps more serious than the economic risk to their economies. Higher fuel and food prices can trigger public frustration and drive electoral outcomes. That is a danger the Trump administration in America faces ahead of that country’s midterm elections in November. It is also a danger the African National Congress increasingly faces ahead of South Africa’s November local government elections.

For now, $100 oil is best understood as a global tax on consumers, not a global disaster. It hurts households and firms, but it is still manageable within the current world economy.