23rd September 2026
The price of oil is normally reported in US dollars, so when we look at Brent crude at $100 a barrel it is easy to forget that this is not necessarily the price ultimately paid by British households.
For Britain there are two important variables: the price of oil in dollars and the value of the pound against the dollar.
That makes the growing US national debt more relevant to British consumers than it might first appear.
America's gross national debt has now passed $40 trillion. The US Congressional Joint Economic Committee put it at $40.10 trillion on 3 September, an increase of $2.67 trillion over the previous year. The average interest rate on marketable US government debt has also risen.
The question is what happens if investors increasingly become concerned about the amount America has to borrow and the cost of servicing that debt.
One possible consequence could eventually be a weaker US dollar.
That is certainly not a certainty. The dollar remains the world's dominant reserve currency and US government bonds remain central to international finance. In periods of financial or geopolitical uncertainty, investors can still move money into dollars because of its role as a global safe-haven currency.
There is also an unusual complication. Higher US interest rates can actually strengthen the dollar because investors can earn more by holding dollar assets. Recent movements have demonstrated this. The US 10-year Treasury yield has risen to around 5%, while concerns about American debt have simultaneously been putting pressure on the dollar.
So the relationship is not straightforward.
But suppose the dollar did weaken substantially against sterling.
Imagine, simply for illustration, that oil remained at $100 a barrel. If £1 bought $1.34, that barrel would cost roughly £75 before refining, transport and taxes.
If sterling strengthened so that £1 bought $1.50, the same $100 barrel would cost about £67.
The oil price in dollars would not have changed at all, but the British cost would have fallen by around £8 a barrel.
This is why the exchange rate matters.
The opposite is also true. If the pound weakened against the dollar while oil remained at $100, British consumers would pay more.
There is another complication. A falling dollar can itself push up the dollar price of commodities. Oil producers sell a dollar-priced commodity but have costs and expenses in many different currencies. Investors also tend to use commodities as a hedge against currency weakness and inflation.
Consequently, a 10% fall in the dollar does not simply translate into a 10% fall in Britain's oil costs.
For motorists and households using heating oil, the chain is more complicated still.
Crude oil price → dollar exchange rate → refining costs → wholesale fuel price → transport and distribution → pump or heating-oil price.
That is why the recent fall in Brent crude does not necessarily translate immediately into cheaper diesel or heating oil.
There is another reason to watch the dollar at present. Sterling has recently been trading around $1.34, close to a two-month low. Reuters reported on 22 September that the pound was at about $1.3366 as markets considered developments around Iran and the Strait of Hormuz.
So Britain is currently exposed to movements in both directions.
If the Middle East crisis eases and oil prices fall, British consumers could benefit. If sterling also strengthens against the dollar, the benefit could be greater.
But if the pound weakens at the same time as refined-fuel supplies remain tight, the fall in Brent could provide surprisingly little relief at the petrol pump or when a heating-oil tank needs filling.
The bigger question is therefore not whether America's $40 trillion debt will suddenly cause a collapse in the dollar. There is no evidence that such an event is imminent.
It is whether the continuing growth of US debt gradually changes the financial environment in which the dollar operates.
For Britain, that matters because we buy many of the world's most important commodities in dollars.
The oil price we see on the financial pages is therefore only half the story.
The other half is sitting quietly beside it on the foreign-exchange screen.