As oil goes, so goes inflation?

Escalating tensions around Operation Epic Fury and the effective closure of the Strait of Hormuz have pushed risk assets lower, with equities sliding, volatility surging, and traditional safe havens like Treasuries instead pricing in renewed inflation risk. Oil’s sharp move to $100 per barrel and rapidly rising gasoline prices threaten to reverse recent disinflation progress, raising the odds that the Federal Reserve pauses cuts or even considers a hike if energy-driven pressures persist.

This mix of geopolitical uncertainty, higher real yields and softer consumer sentiment points to slower growth ahead and a more fragile backdrop for corporate earnings. For investors, near-term conditions favor disciplined risk management, careful liquidity planning and selective exposure to energy producers that may benefit from elevated prices while avoiding overreaction to worst-case oil scenarios. Advisors should prepare clients for continued volatility into April as negotiations unfold and policy responses from both central banks and governments become clearer.