At the start of October, the price of Brent crude oil climbed back above $100 a barrel, reaching $101.32 on the morning of 7 October. The main reason is the conflict involving Iran that began in late February 2026 and has largely shut the Strait of Hormuz, a narrow sea route that used to carry about a fifth of the world’s oil. Expensive oil means expensive petrol and diesel, and that naturally turns attention to electric cars and to the best-known electric carmaker of all, Tesla. This guide explains, in simple terms, how oil prices and other big forces affect Tesla’s shares.
Why oil prices matter for an electric carmaker
When fuel costs rise, running a petrol or diesel car becomes more expensive, and more people consider switching to electric. That can boost demand for electric vehicles. In the United States, average fuel prices have climbed sharply this year, and in parts of Europe, Italy for example, diesel has become more expensive than petrol, a reversal of the usual pattern.
In an October analysis, a writer at The Motley Fool suggested that higher oil prices linked to the conflict could strengthen the case for electric vehicles. There is some evidence of steady demand. Tesla delivered 486,532 vehicles worldwide in the third quarter of 2026, well ahead of the 461,974 analysts expected, although that was still about 2% below the same period of 2025, when US buyers rushed to purchase before a federal tax credit expired.
Oil is only part of the story
If expensive oil were the only factor, Tesla’s shares might be soaring. They are not. According to figures published in early October, the stock was down roughly 15% for the year. Over the summer it swung widely, closing at $425.30 on 1 July and as low as $298.32 on 29 July, before recovering to $370.59 on 2 October after the strong delivery figures. Over the past twelve months it has traded between roughly $297 and $499.
Several other forces explain these swings.
Interest rates
The first is interest rates. The US Federal Reserve raised its main rate on 16 September to a range of 3.75% to 4%, its first increase since 2023, partly because higher energy prices have pushed up inflation. Higher rates tend to hurt companies whose value depends on profits expected many years in the future, because money earned later is worth less today. Tesla is a prime example. The next Fed decision is due on 28 October.
Valuation
The second is valuation. Tesla’s diluted earnings per share over the four quarters to the end of June 2026 totalled $1.08. At the early-October share price, that means investors were paying roughly 340 times a year’s profits for each share. Traditional carmakers usually trade at a small fraction of that. The gap exists because many investors see Tesla as more than a car company.
Robotaxis and robots
That brings in the third force: future products. Tesla has launched robotaxi services in several US cities, and the same Motley Fool analysis counted seven markets, including Austin, San Francisco and Miami, while noting that most operate in limited zones with some remote monitoring. The company is also developing a humanoid robot called Optimus, which has begun limited manufacturing. For many shareholders, these projects matter more to the long-term value of the company than how many cars it sells in a given quarter.
Competition is another factor worth mentioning. Chinese manufacturers have expanded quickly in Europe and other markets with cheaper electric models, and established carmakers continue to launch new battery-powered cars. More choice for buyers can put pressure on prices and margins, even when overall demand for electric vehicles is rising.
Reading the forecasts
This mix of factors explains why any tesla share price forecast tends to cover a very wide range. An analyst who believes robotaxis will soon operate at scale in many cities may see the shares worth far more than today. One who focuses on car margins, competition from Chinese manufacturers and the high valuation may see them worth much less. Neither view is certain, and forecasts are best read as scenarios built on stated assumptions rather than predictions of a guaranteed outcome.
A good habit is to check what a forecast assumes about three things: vehicle sales and margins, the timing of self-driving services, and interest rates. If those assumptions are not explained, the number on its own says very little.
Dates to watch
The next important date is 21 October, when Tesla publishes its third-quarter financial results after the US market closes, with a webcast at 4:30pm Central Time, or 10:30pm in the UK. Investors will look at profit margins, the energy storage business and any update on robotaxi expansion. A week later, on 28 October, the Fed’s rate decision will shape the mood across technology shares. Meanwhile, oil prices will keep reacting to news from the Gulf.
The bottom line
Expensive oil is good news for the argument in favour of electric cars, but it does not decide Tesla’s share price on its own. Interest rates, a valuation built on future products and the pace of progress in self-driving all pull in different directions. Understanding those forces makes the headlines about Tesla’s shares much easier to follow, whichever way they move next.
