What happened
Brent crude, the global oil benchmark, has dropped to around 40 percent below its April peak and now sits below late February levels. Oil flows through the Strait of Hormuz have recovered above 10 million barrels a day, easing fears of a supply shock from Middle East tensions.
Why it matters
Oil sits behind the price of almost everything, from petrol and heating to the cost of shipping goods. When it falls, it takes pressure off inflation and helps households and businesses that were bracing for far higher energy costs earlier in the year.
Explained simply
Oil is like the blood supply of the economy. When people feared the supply might be cut off, the price spiked in panic. Now that the supply is flowing normally again, the panic premium has drained away and prices have settled back down.
What it means for you
Lower oil should feed through to cheaper petrol at the pump and take some heat out of inflation, which is good news for anyone driving or heating a home. It could also lift energy-sensitive parts of the market, though UK energy shares in your pension may see thinner profits when oil is cheap.
