The Strait of Hormuz: Oil’s Return to Center Stage
Posted on March 16, 2026
At our Annual Outlook in January, we highlighted one factor worth keeping on a “high-alert” screen: the price of oil. At the time, West Texas Intermediate Crude Oil (WTI) was roughly $60 per barrel, and our point was simple; durable inflation spikes rarely take hold during periods of cheap energy. Conversely, a sharp rise in oil can be an early warning of either looming volatility or impending inflation—or both.
Fast forward two short months later and WTI hovers around $100 per barrel driven by an unexpected, albeit likely temporary, supply shock. The ongoing and escalating Iran conflict has caused an abrupt halt of oil supply passing through the Strait of Hormuz. Roughly ~20% of the world’s oil and liquefied natural gas traverses this water passage, so not surprisingly the disruption has forced the market to reprice supply risk quickly. In the last week alone, WTI briefly surged above $119, retraced to $76 and then quickly rallied again to $100/brl, marking the most significant uncertainty and volatility since 2022.
What changed:
This move is best understood as a geopolitical supply shock centered on global transport chokepoints and risk to Middle East flows, rather than a sudden surge in underlying demand. This disruption is extremely large, with 20 million barrels per day effectively taken offline due to interruptions around the Strait of Hormuz. Even if some barrels soon resume flow, the market prices the risk of interruption immediately because oil inventories, refining schedules, and shipping logistics cannot adjust instantaneously, and there are already meaningful backlogs that will take some time to resolve, even when hostilities cease.
Why it matters:
Inflationary pressures magnify with high oil prices. Prices at the pump have surged, but more notably, the cost of transporting goods around the world has skyrocketed virtually overnight. There are also energy-adjacent products impacted by the turmoil: large quantities of fertilizers, as well as sulfur, helium, bromine, and aluminum, all originate from this region, and shortages will have downstream impacts in several industries.
If these pressures persist, inflation could spike and force the Federal Reserve to halt what was expected to be a more meaningful rate cut cycle. Probabilities of near-term interest rate cuts continue to diminish, with cuts potentially not likely until late ’26 or early ‘27.
Looking forward:
Volatility is likely to remain high in the near term alongside the daily headlines, but as supply routes normalize and emergency measures take effect, WTI should similarly stabilize in a range meaningfully lower than today’s price.
Equity markets typically respond poorly to oil spikes because they squeeze corporate profit margins and complicate the inflation/rate path. Still, the market is forward-looking: if the shock proves temporary, equities can regain their footing and end the year higher, as earnings growth proves resilient.
As always, we’re focused on maintaining diversification, emphasizing quality, and managing risk while markets digest fast-moving headlines. Visit www.floridatrust.com to contact us or learn more about Florida Trust’s investment philosophy.
Logan S. Webb CFA, CFP®
Florida Trust Portfolio Management
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