Throughout much of the first two months of 2026, WTI crude oil was trading in the $55 – $65 per barrel range. This was a continuation of a trend throughout much of 2025 argued to be due, in part, to an excess of supply caused by US production and a cooling Chinese economy. This price is significant as the cost of producing a barrel of oil in the US is estimated to be in the $50-$60 per barrel range. The trend of low price oil seemingly ended on February 28, 2026 with the commencement of the conflict in Iran, sending the price of WTI Crude to approach $100 per barrel within a matter of weeks.
A Cause of The Increase: The Strait of Hormuz was not commonly talked about a few weeks ago. Today, it is a daily topic as nearly 20% of global oil shipments travel through the Strait. In a similar manner to the Houthis’ recent disruption of global shipping in the Red Sea, Iran has effectively halted passage through the Strait to impact supply. Even after the Strait reopens, supply disruptions may persist due to damage to key infrastructure in Iran. A risk remains that the conflict will extend outside of Iran causing greater damage to key energy infrastructure in the Gulf states.
The Impact: The impacts of higher oil prices are far broader than the roughly $0.70 increase in the price of gas since the conflict began.
- Rise in US Inflation: An increase in the price of gas and other energy (i.e. natural gas) may create a ripple effect across the US economy, increasing the price of goods and services. The increase in energy prices is beginning to feed directly into a trend of higher headline inflation numbers.
- Increase in Interest Rates: At the start of 2026 there was a growing belief that the US Federal Reserve would lower short term interest rates. With inflation on an increasing trend, markets are beginning to price out rate cuts and shift toward a higher for longer interest rate stance from central banks around the globe.
- Increase in Yields: Through the first three weeks of March, there has been a rapid repricing of the US Treasury yield curve. The increase in Treasury yields can impact more than just the price of bonds in an investment portfolio. For example, 30-year fixed mortgage rates tend to be priced off of the 10-year Treasury and have risen as well.
- Rise In The Dollar: In the month since February 23rd, the US Dollar Index (DXY) has climbed over 2%. A stronger Dollar and rising bond yields tend to put pressure on precious metals, such as gold and silver, which have experienced declines in the month of March, 2026.
- Drag on Economic Growth: The longer that higher oil prices, higher inflation, and higher interest rates persist, there is a heightened risk of a stagflationary environment of lower GDP growth with higher inflation.
- Volatility in US Equities: The above factors, along with heightened uncertainty and geopolitical risk, have contributed to putting pressure on the broad US equity market and created winners and losers among sectors. For example, the average maximum decline from year-to-date highs amongst members of the NASDAQ index is approaching 30% as of the first three weeks of March.
- Underperformance of Global Equities: 2025 was a strong year for global equities with several of the international benchmark indices achieving total returns in excess of twenty percent. After a strong start to 2026, those indices have experienced a sharp decline to turn negative on the year through the first three weeks of March.
March has served as an example of the financial pain that may be caused when the economic landscape can change almost overnight. A long-term disciplined strategy focused on quality and fundamentals is designed to help avoid the stress that often accompanies the end of a short-term trend or fad.
A member of the EBS Wealth Management team is here to answer questions about the shifting economic landscape and discuss how we may assist.
This material is provided for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. The views expressed reflect current market conditions as of March 23, 2026 and are subject to change without notice. Any forward-looking statements, forecasts or estimates are based on assumptions and current expectations and may not occur. Actual results may differ materially. Investing involves risk, including the possible loss of principal. The economic and market data presented has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. Index performance is shown for illustrative purposes only. Investors cannot invest directly in an index.