There's an old Kissinger quote that never gets old: "Control oil and you control nations."
Well then. Oil is rising. Again. And the reason is as old as geopolitics itself: the Strait of Hormuz, that 21-mile-wide chokepoint through which roughly 20% of all the oil consumed on the planet flows. Trump is assembling a coalition to make sure this corridor stays open. And when an American president needs to put together a military coalition to keep a strait operational, you can bet your ass things aren't looking pretty.
The chokepoint the market pretends doesn't exist
Let's get back to basics — the stuff Wall Street quants forget while staring at candlestick charts.
The Strait of Hormuz sits between Iran and Oman. Every single day, 20 to 21 million barrels of oil pass through it. Iran, Iraq, Kuwait, Saudi Arabia, the UAE — everyone needs this corridor. If someone blocks it, or even threatens to block it, crude prices shoot up like a SpaceX rocket in a hurry.
And Iran, which is right next door and has had missiles pointed at this strait for decades, has never hidden the fact that it would play that card if pushed. It's the geopolitical equivalent of a guy holding a grenade in a crowded room. Nobody wants him to pull the pin, but everybody knows he can.
Trump and the old "big stick" playbook
Trump's move is nothing new. It's the same old Theodore Roosevelt playbook: speak softly and carry a big stick. Except Trump skips the "softly" part.
Assembling a coalition to "reopen" or "secure" passage through the Strait of Hormuz is, in practice, a direct message to Iran: "Go ahead, try to close it. See what happens."
The problem is that this kind of posture escalates tensions. And tensions in the Persian Gulf have an immediate side effect: crude goes up. Not because there's actually an oil shortage — but because the fear of a shortage is already enough to move the market.
And here's the lesson Nassim Taleb never tires of repeating: markets don't price reality, they price the perception of risk. When Trump talks about a military coalition near Iran, the market doesn't wait around to see if things go sideways. It prices in the disaster ahead of time.
What this means for your wallet
More expensive oil triggers a chain reaction:
- More expensive gasoline (and diesel, and jet fuel)
- More expensive freight (which drives up the cost of everything, from lettuce to iPhones)
- Inflationary pressure (and central banks with less room to cut rates)
- Oil stocks climbing (ExxonMobil, Chevron — feeling good yet?)
- Airlines and transportation getting hammered
If you've got a position in commodities or energy-related companies, now's the time to pay attention. This isn't the moment to play hero or go all-in on one side. This is the moment to understand that geopolitics is the variable no Excel model captures properly.
History rhymes — and it's violent
In 1988, during the Iran-Iraq War, the USS Vincennes shot down an Iranian civilian airliner over the Persian Gulf. 290 dead. Tension in the strait isn't academic theory. It's real history, with real blood.
In 2019, Iran seized a British oil tanker in the Strait of Hormuz. Crude jumped. In 2024, Yemen's Houthis — backed by Iran — attacked ships in the Red Sea, rerouting entire commercial shipping lanes.
The pattern is crystal clear: every time someone makes a move on the Gulf chessboard, the whole world feels it in their wallet.
So, what do you do?
First: stop ignoring geopolitics. Second: understand that the price of oil is, above all else, a global fear indicator. Third: keep in mind that military coalitions in the Middle East rarely end quickly or cleanly.
Oil is rising because the world remembered — once again — that modern civilization depends on a maritime corridor the size of a two-lane county road, squeezed between two countries that hate each other's guts.
And there you were, thinking the biggest risk to your portfolio was the Fed minutes.
