Oil Volatility And What It Means For Financial Planning

Markets do not need a direct hit to react, they just need a credible threat to a bottleneck. We sit down to connect today’s Middle East conflict to the real-world mechanics that move portfolios: oil volatility, shipping disruption, insurance risk, and the fear premium that gets priced into markets long before the story feels “settled.” If you have been watching crude jump from the $70s toward $90 and beyond and wondering what that means for your retirement plan, you are not alone.

We talk through why the Straits of Hormuz matters so much to global energy supply, why most of that flow feeds Asia and especially China, and how that concentration can ripple back into US inflation and consumer prices even when America produces much of its own oil. We also unpack how modern disruption works, from mines to drones to tanker risk, and why those details can matter for inflation expectations, interest rates, and investor sentiment.

Most importantly, we bring it back to financial planning basics: separate news from noise, avoid knee-jerk reactions, and keep your strategy aligned with your time horizon and risk tolerance. If you want a clearer view of how geopolitical risk and energy prices can affect your long-term investing and retirement planning in Northeast Tennessee and Southwest Virginia, follow along and reach out. Subscribe, share this with a friend who is stressing over headlines, and leave a review so more people can find the show.

To learn more about B&H Wealth Strategies visit:
https://www.BHRetire.com
B&H Wealth Strategies 
423-247-1152 

Securities and advisory services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak and B&H Wealth Strategies are not affiliated. http://www.finra.org/ http://www.sipc.org/

Transcript

Welcome And Quick Setup

SPEAKER_00 0:03

Welcome to the Four Seasons Podcast, brought to you by BH Wealth Strategies, serving Northeast Tennessee and Southwest Virginia since 1966. Here, we guide you through the ever-changing seasons of your financial journey, offering insights to help you grow, protect, and enjoy your wealth. Ready to turn your financial dreams into reality? Dare to dream. And now, here's your host, President of BH Wealth Strategies, Jeff Bingham.

SPEAKER_01 0:44

Global events can have a significant impact on planning, savings, and short and long-term planning strategy. Welcome back, everybody. Skip Monty back in the studio with president of BH Wealth Strategies, Mr. Jeff Bingham. Jeff, welcome back.

SPEAKER_02 1:02

Thanks for having me back, Skip. Looking forward to it. The topic of this one, which you kick off here in a minute, uh is certainly timely. Only thing I would kind of add to that as you kick it off here in a moment is that remember that we're recording this on Monday, March the 16th. And by the time we go through edits and whatnot, some of perhaps the what we talk about, we'll try to keep it general, will probably be uh will have moved uh, you know, a little bit. So uh you know keep in mind when you watch this and you're seeing this live, or not live, but the uh the recording of this that you know we're what date we're on when we do this.

Middle East Conflict And Market Risk

SPEAKER_01 1:40

Very, very timely issue. You know, a lot going on in the world right now, uh in Iran, in the Middle East, all over the Middle East, and in our involvement in Israel. So uh very timely subject. What impact can recent events in the Middle East have on financial markets and specifically my financial planning?

Why The Straits Of Hormuz Matters

How Disruption Pushes Oil Higher

Inflation And The Ripple Effect

China Trade Leverage And Oil Supply

Stay The Course And Get Help

SPEAKER_02 2:01

Yeah, um, like I said, it's um, you know, I'm obviously having a lot of conversation about this. There's a lot of information out there. Um, you know, and then and and you know, kind of what I always kind of talk about news and noise that's out there. So I'll try to break this down and keep it as short and concise as I can on this, uh, is that, you know, when this this war in Iran, without going into, you know, the the merits of it, let's say, but we're involved in it right now. So we're there, you know, alongside with Israel. Uh maybe there's a few other countries that are beginning to kind of at least begin to to come on board with this to police the Straits of Hormuz. And that's gonna be what we'll we'll spend a little bit of time, you know, talking about. That's where the disruption and uh some of the affordability of the investments, the the disruption in global uh economics are gonna take place. But um, you know, right now, the biggest thing that we see and that we feel on a on a regular basis as uh both as investors and as citizens and consumers is that oil prices have uh have have been all over the board, but but they are up. And they are up significantly from March the first when um when this war started. Uh on March the first, we were somewhere between 65 and$70 a barrel of oil at that point in time this morning. Uh last look that I had uh was around$94,$95 a barrel. Um so do the arithmetic on that, you know, we're you know, that's it's uh, you know, we're 30, 35%, you know, maybe as much as 40% up. We've also seen some over the weekend. Um we saw oil prices, you know, go over$100 a barrel. Weekend before last, we saw them touch nearly$120. They came down, you know, early on Monday. So there's a lot of you know, there's a lot of moving back and forth right there. I mean, we've been as high as nearly$120. We also saw oil pull back to as low as$76 a barrel a couple of weeks ago for a short period of time during an interday trade. Uh, and that has to do with the moving target of information that's coming out of there. But where that where that is coming from is not that Iran uh is a large uh supplier of oil around the world uh because the sanctions and everything that they've had levied against them for years and years now, you know, they really are a very small supplier of the world's oil supply. But 20% of the world's oil supply goes through the Straits of Hormuz, maybe it's a little bit more than 20%, but roughly 20% of it. And of that 20% of oil that goes, of all the world's supply of oil that goes through there, 80 to 90% of it goes to Asia, and most of that goes to China. So I think that's a very significant in what uh we can touch back on that in a moment ago. So, you know, there's a lot of of interest in kind of controlling and policing the Straits of Hormuz. And I think part of getting Iran, you know, unsettled out of power, of which the mullahs uh and the Ayatollah has had over there uh for the last 47 years since the overthrow of the Shah, you know, has they've always been disruptive in the Straits of Hormuz. And so hopefully, you know, through this, that that we as we weaken them militarily, obviously economically, and so on, that uh that that that can be something that gets remedied, that they won't be the sponsor of terror around the world, uh, that we can, you know, and again, these are these are lofty goals, uh, and that the Straits of Hormuz will have more um you won't have to worry about all the time whether we're mining if they're blowing up ships or sending drones in there because that's kind of where they've been destinated militarily. But how are they disrupting the Straits of Hormuz and keeping oil is where they are, which is what their goal is, right? Their leverage is to keep oil prices as high as it can be. Uh, you know, their stated goal was to drive it to$200 a barrel. I do not think that they will be successful in that, that is my opinion. Um, but you can see they've been able to they've been able to bounce it to over$100 several times and keep it well above where it was, you know, pre-war. Um, but they're, you know, and they're doing that with uh, you know, their Navy has essentially been sunk. They have no Air Force to speak of. But what they do have are they still got, they can go drop mines, you know, in the you know, in the straits uh with, you know, they don't need their Navy to do that, if you will. They can do it with boats and whatnot. They can do it, you know, just regular boats, so to speak. They uh also have an incredible amount of drones, which drones are the dreaded uh, you know, kind of in in today's warfare. I mean, they're they're just treacherous little little things that cost, you know, like$20,000 to make the drones that they use. And we are shooting them down with missiles that are, you know, that are you know, tomahawks and whatnot, they're about four million dollars. That's a terrible ratio of of what it costs to make a drone versus what it costs to take them down. And they are they are nasty little things in warfare on not to touch a lot on that. Uh, and then also they still have, you know, they still have some missile capability left. And I think, you know, one of the things, if you want to kind of touch on, you know, the the the goals of this war, once we blew their um nuclear facilities, you know, up with the bomb busters and what, you know, the bunker busters and whatnot that we did, I guess, some some what six, nine months ago, whenever that was. Um, what they what we saw was, and you can see some charts on this, is that they really took up their their uh manufacturing of missiles, these these ballistic missiles that they have, uh, and they're very destructive, and they can use those to create havoc, you know, around the world, but certainly in the Middle East, and they were firing tons of them at the beginning of them. We have militarily begun to wipe those out. Um, you know, the not just the missiles, but the manufacturing, the launching capabilities, and all those kind of things. And so, uh, and probably also the material that it requires to get in there to build these things as well. So they're you know, shooting those off, you know, much less frequently, but they can still blow up ships and they've they've taken out some ships, you know, out of the straits, these tankers that need to get through there. The insurance companies, Lloyds of London, as an example, you know, pulled their insurance coverage, you know, on the ships, you know, because if they go down, they've got a, you know, they've got millions of dollars, you know, of some of of uh of oil on board. And so they're you know, they have to ensure that, ensure that risk and going through there is day, not only is it dangerous from losing their cargo, but also getting killed, you know. And most, you know, most of these oil tankers, you know, these people that are crew members on there, they're they're not in the not they didn't sign up for the war. So, you know, they're fearful of going through there. You know, there's been promises made, and we've gotten some ships through there, you know. I think, you know, we're we're kind of policing that a bit and gonna try to, you know, see on how that how that works. And also I think the French have have have kind of uh agreed to come over and help kind of police the straits. So anyway, um, longer than I kind of meant to go on that, but I think that's you know, from a just a an investment perspective, right now it it's oil. And oil, but oil trickles down to everything. There's the affordability crisis, there's inflation that we've been talking about all the way through. This all these things that factor in there. Oil prices drive every price of everything that we consume, not just directly, but also indirectly. I mean, and that's probably obvious, uh, but but it certainly is true. And so uh, you know, we need uh, you know, again, we we don't rely on the straights to get our own. We're we're 70% relying on our own uh you know, our own oil supplies. We become, you know, our uh the the biggest generator, you know, of oil in the world, and we get 70% of our own supply from there. So we're not relying on that. Again, it's Asia. And you can make a case whether or not um this is part of an overarching plan, you know, by the Trump administration or not, from the Venezuelan situation to to to the Iranian situation. I think there are multiple components to those things, but I think one of those has to do with trade and the the trade war and the power struggle uh with that we'll continue to have with the Chinese. And that's mainly where this world is focused between the two powers, if you will, are the US and China. And obviously, as as tariffs, you know, kind of got struck down in their in the form that they had by the Supreme Court, there's other avenues that we won't talk about on here. But where's another way to to put a chokehold on the Chinese enforce more fairness, if you will, at least from our perspective as Americans, maybe not all, but many Americans, and certainly this administration is how do you find leverage in in a in a trade, you know, in trade? How do you find the leverage that you need to keep some fairness in there based on the way the administration sees it? That's oil supply, right? Venezuela. I mean, how did where was China getting the other part of their oil supply? From Venezuela. And uh, you know, that was the first part of this equation, if you're right, wrong, or a different, that occurred there. I think there were multiple reasons why we went in there. I think oil was certainly one of them. Uh, and I think in the in the straits and in the Middle East, there's no question that's part of it right there. So, you know, there's a lot of moving parts in that. Uh, so stay tuned, you know, as that all plays forward. It's a pretty big, yeah, it's a pretty big risk for this administration, if you think about it. It's a big risk for the midterms, which they obviously want to win. So I would think that their intelligence and the things that they have right there, I mean, you gotta, I think you you have some benefit of the doubt here uh that this thing will play out. I don't, I think it's very similar in conversation as how I think that we should, as investors and my clients should look at this and others that are listening would be on April the 9th of last year after Liberation Day, which was April set, or which was April 2nd, actually, right, when the tariffs were put on and the market reacted horribly uh to that right there and dropped, you know, 10 to 15 percent in that in a in a seven-day time period. And I did a video talking about short-term paying, long-term gain. Give this time to play out. Do not begin to think that you need to make knee-jerk reactions, that the markets are not going to go straight down, that oil prices aren't gonna go straight through the roof, that this it will begin to smooth its way out. And I think this is more of the same right here. It's a different type of war where it was a trade war before. This is an actual war. Uh, and you know, bombs and bullets, not, you know, not you know, not tariffs and taxes and and various things there, but they end up having some of the same effects, and they also uh, you know, that are kind of underneath the hood. So I think it's a I think it's you you're gonna feel some short-term pain, but I think the gain over this over the long, over the long pull uh is is gonna be great. More, you know, a bit of settling in the Middle East, so less disruption, and always with a fear of the Iranians creating mischief there in the straits to strangle the world's less that's their leverage point. So we're taking that away. I think we're also there to free the people up as well. So again, what I should have said to begin with is this war is going on. I ask everyone out there as we are, pray for our soldiers, pray for those that have already lost their lives, that are in harm, and those that are in harm's way with their those that have lost, those that have been wounded, their families, also be with our leadership in prayer, that they're making the right decisions, you know, for us and uh the Iranian people and all the others in the Middle East, all that are affected by this, that uh that our thoughts and prayers should be with them to get through this kind of thing. So it's easy to sit here and talk, you know, on surface about, oh, it's a war and we see it, and it's a video game. Looks like a video game when you watch it on TV. For those that are old enough to remember, it looks like 1991 when we went into the first Gulf War, right? It's the same type of thing with a little more vividness to it. We watched it, you know, there was people, there's people in those buildings that are dying, you know, and uh where we just look at it, you know, we're kind of immune to it because of the way it looks. So don't do anything silly. If you want to ask more questions, feel free to reach out to me at at BH12 Strategies, send me an email at Jeff at BHRetire.com. I'll I'll answer them. But but I think again, what I should have said and led with keep all these folks in our prayers. Amen, brother.

SPEAKER_01 14:39

Stay the course, stay the course, and pray for our troops and pray for a quick end.

SPEAKER_02 14:44

Absolutely.

SPEAKER_01 14:45

That's it. All right, Jeff, thank you so much. Very timely topic. I'm sure we'll revisit again soon in another episode.

SPEAKER_02 14:53

Thanks, Kev. Enjoyed it very much. You have a good week.

SPEAKER_01 14:56

All right, you too. Thanks so much, Jeff.

SPEAKER_00 15:02

Thanks for tuning in to the Four Seasons Podcast, brought to you by BH Wealth Strategies, where your financial success is our priority. Schedule your free 20-minute consultation today by calling 423-247-1152 or by visiting bhretire.com. Take the first step toward making your financial dreams come true. Until next time, remember every season is the right season to plan for your future. Securities and registered investment advisory services offered through Silver Oak Securities, Inc. Member FINRA SIPC, BH Well Strategies and Silver Oak Securities, Inc. are not affiliated.