We study the effect of supply and demand-induced oil price uncertainty on the cost of debt for a sample of US loans credited during the 1990-2019 period. We estimate oil price uncertainty following Jurado's et al. (2015) study, whereby oil price uncertainty is captured by forecasting the unpredictable fluctuations of macroeconomic variables. Interestingly, our findings reveal that oil price uncertainty induced by supply shocks increases cost of credit, while oil price uncertainty driven by demand shocks decreases the cost of bank loans. The negative effect of oil price uncertainty on the cost of credit is more pronounced for firms that belong to politically sensitive industries. Overall, our findings feed into the emerging discussion of the differentiating effects of oil price uncertainty on micro-level outcomes and provide useful implications for both bankers and borrowing firms.