Oil Price of $120 Per Barrel Risks Crushing American Consumers

The oil price that could break American consumers is $120 per barrel, according to Interactive Brokers senior economist Jose Torres.

Torres made this prediction during a CNBC panel discussion on Fed decision day. He stated that 'oil above 120 is a serious risk for consumer spending' and called for a 25 basis point rate increase. However, it's essential to note that $120 is still about 20% above the current price of West Texas Intermediate (WTI) crude.

Historical data suggests that WTI last traded at this level in June 2022, when it reached $114.84 per barrel. During that summer, the economy experienced a rapid tightening cycle, one of the fastest in 40 years.

The current household cushion is thinner than before. The personal savings rate has dropped to 2.8% in the second quarter of 2026, down from 6.2% in the first quarter of 2024. Consumer sentiment sits at 55.2, which is below the recessionary threshold.