Oil Surged 35% — Here’s What It Means and Why We’re Not Panicking
March 2026 | Market Commentary
WTI crude closed at $90.90 on Friday — a 35% surge in one week, one of the sharpest moves in oil futures history. Brent crude settled at $92.87. As of today, Oil has risen to ~$100/bbl.
The Strait of Hormuz — through which roughly 20% of global oil supply flows daily — has seen major disruptions, with multiple tanker attacks and commercial shipping largely halted.
We know this is unsettling. Here’s how we’re thinking about it.
Oil Shocks Have a Playbook — And It Favors the Patient
This is not the first time markets have faced a sudden oil shock. Three modern parallels tell a consistent story.
1990 — Gulf War
Oil doubled from $17 to $36 after Iraq invaded Kuwait. The S&P 500 fell 19.9%.
Then it snapped back. When Desert Storm launched in January 1991, the conflict ended in six weeks. Oil crashed 33% in a single day. The S&P 500 hit new all-time highs less than four months after the bottom.
2008 — The $147 Barrel
Oil surged from $95 to $147 in the first half of 2008. But oil wasn’t the cause — the housing collapse and a seizing financial system were. After peaking, oil fell 78% in five months as demand cratered.
The important distinction: In 2026, the banking system is healthy, balance sheets are strong, and there’s no credit crisis underneath the surface.
2022 — Russia/Ukraine
Russia’s invasion sent oil from $76 to $130 in two weeks. The S&P 500 eventually fell 25.4% — but the primary driver was the Fed’s aggressive rate-hiking cycle into already elevated inflation (CPI was 7.9% before the invasion).
Oil rolled over to $75 by late 2022. Markets recovered and went on to hit new highs.
The Inflation Picture
A sustained $20+ increase in oil typically adds 0.4 to 1.0 percentage points to headline CPI over 3-12 months. CPI was running at 2.4% before the spike — even a worst-case pass-through puts inflation near 3-3.5%, well below the 8-9% levels we dealt with in 2022.
That’s manageable. We get February CPI on March 11 (Wednesday) — this report will mostly capture data from before the spike, giving us a clean read on where inflation stood heading into the disruption.
The Fed’s Position
February payrolls came in weak at -92,000 with unemployment rising to 4.4%. Rising energy costs alongside a softening labor market brings the stagflation conversation back.
But today’s setup is very different from the 1970s: inflation expectations remain anchored, the Fed’s credibility is intact, and the financial system is sound. The Fed meets March 17-18 — no rate change is expected, but the statement will signal how they’re weighing the tradeoff.
What We’re Doing
Our portfolios carry put protection — so we’re already positioned for exactly this kind of event. That downside hedge is working as intended, and it gives us the flexibility to stay invested through the volatility rather than making reactive decisions.
We are watching this closely and will adjust if the data warrants it. But right now, the drawdown in equities has been remarkably contained (<5%) compared to past oil shock episodes — and our hedges provide an additional layer of cushion beyond that.
History is clear on one thing: panic selling into geopolitical shocks has been the wrong move every time. In 1990, the market recovered to new highs in four months. In 2022, the selloff created the launching pad for a two-year bull run.
Frequently Asked Questions
Do rising oil prices cause a stock market crash?
Not always. Oil shocks have preceded some market downturns (like 2008) but in other cases (like the 1990 Gulf War), stocks recovered quickly after the initial spike. The key factor is whether the oil shock triggers broader economic damage like inflation or recession, or whether it's a temporary supply disruption that markets can absorb.
How do oil prices affect retirement portfolios?
Rising oil prices can affect portfolios through higher inflation (which erodes purchasing power), increased costs for businesses (which pressures earnings), and potential interest rate responses from the Federal Reserve. For retirees, the biggest risk is if an oil shock triggers a broader market decline during the withdrawal phase, compounding losses through sequence of returns risk.
Should I change my investments because of the Iran conflict?
Geopolitical events create short-term volatility but rarely change long-term market direction on their own. The more important factors are earnings trends, interest rates, and economic fundamentals. Rather than making reactive changes based on headlines, a systematic risk management approach — like monitoring momentum signals and using options hedging — helps navigate uncertainty without making emotional decisions.
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