Operation Epic Fury, the Strait of Hurmuz, and Your Portfolio – March 15, 2026

Last Week in Markets: March 9–13, 2026

It was another rough week. The Strait of Hormuz disruption got worse, not better, and a February jobs report showing a loss of 92,000 positions and unemployment ticking up to 4.4% handed the market two things to worry about at once. The S&P 500 posted its third straight weekly decline and closed at its lowest level of 2026.

Index	Week (Mar 6–13)	Since Feb 28*	MTD (March)	YTD (2026)	1-Year
S&P 500 Index	-1.6%	-3.6%	-2.7%	-3.1%	+20.1%
MSCI ACWI Index	-1.8%	-4.1%	-2.9%	-1.4%	+18.3%
MSCI EAFE Index	-1.4%	-2.8%	-1.8%	+12.6%	+24.7%
MSCI EM Index	-2.1%	-4.8%	-2.5%	+6.3%	+16.9%

Sources: S&P Dow Jones Indices LLC (S&P 500 daily closes confirmed via FRED/St. Louis Fed and StatMuse); MSCI Inc. Week return is Mar 6–Mar 13 close-to-close. *“Since Feb 28” uses Feb 27 close as the pre-operation baseline (markets were closed on Feb 28 when the operation launched over the weekend). S&P 500 Feb 27 close: 6,878.88; Mar 13 close: 6,632.19 (Source: S&P Dow Jones Indices LLC via FRED). MSCI index returns are approximate, sourced from ETF proxies (EFA, EEM, ACWI) and market commentary; subject to final confirmation against official MSCI end-of-day data. Returns are price returns in USD. Past performance is not indicative of future results.

International markets have taken a harder hit than U.S. equities since the conflict began, with Emerging Markets leading the decline. The logic is straightforward: Asia and Europe import far more Gulf oil than the U.S., which now produces more than it consumes. That said, international developed markets still hold a meaningful year-to-date lead over the S&P 500—a gap built on dollar weakness and European earnings strength that predates the conflict entirely.

The Strait of Hormuz: Why It Matters So Much

Twenty-one miles wide at its narrowest point. One-fifth of the world’s daily oil supply. No real alternative route. That’s the Strait of Hormuz in three lines. In 2024, about 20 million barrels of oil and petroleum products moved through it every day—roughly 20% of global consumption and more than a quarter of all seaborne oil trade. (Source: U.S. Energy Information Administration, “Amid Regional Conflict, the Strait of Hormuz Remains Critical Oil Chokepoint,” 2025.)

Saudi Arabia, the UAE, Kuwait, Iraq, and Qatar all depend on it to move their oil to market. There are partial workarounds—Saudi Arabia’s East-West Pipeline and the UAE’s Abu Dhabi Crude Oil Pipeline can handle some overflow—but nowhere near enough to replace full Strait capacity. When Hormuz is disrupted, there is no clean Plan B.

A serious, sustained shutdown doesn’t just push oil prices higher. It ripples into inflation, slows growth, and tightens financial conditions globally. That’s the transmission mechanism markets are pricing right now.

What Iran Has Actually Done

Iran’s response has been systematic and multi-layered. On March 2, an IRGC official formally declared the Strait closed, warning that any vessel attempting transit would be “set ablaze.” (Source: Congressional Research Service, March 2026.) The IRGC has since carried out drone and missile strikes against more than a dozen commercial vessels, targeting ships regardless of flag or nationality—a pattern that maritime intelligence firm Windward AI characterized as “area denial” rather than selective enforcement. Vessels struck have included the Thai bulk carrier Mayuree Naree, the Marshall Islands-flagged Safesea Vishnu, the Maltese-flagged Zefyros, and others in Iraqi territorial waters and near Dubai. (Sources: ABC News, NPR, Royal Thai Navy, UKMTO, March 2026.) U.S. Central Command confirmed it destroyed 16 Iranian minelayers near the Strait on March 11, though no mines have been confirmed in the water. By March 11, just two vessel crossings were recorded in a full day, versus the normal 35–40 transits—a greater than 95% collapse in traffic. (Source: Windward AI Maritime Intelligence Daily, March 12, 2026.) War-risk insurance for Strait transits has been effectively withdrawn by most underwriters, making the economics of transit prohibitive even where the physical risk might be manageable.

WTI & Brent Crude Oil Futures — Key Price Levels (as of 9:09 AM CT, March 15, 2026) WTI Crude Oil (NYMEX April '26 Futures) Pre-conflict close (Feb 27): $67.00/bbl Conflict intraday peak (Mar 9, overnight):  $119.48/bbl     (+78.3% from pre-conflict) Friday March 13 close: $98.71/bbl Today March 15 (9:09 AM CT):  $98.71/bbl     (+47.3% vs. pre-conflict) Down from peak:     -$20.77/bbl  (-17.4% from the Mar 9 high) Brent Crude Oil (ICE May '26 Futures) Pre-conflict close (Feb 27): $72.50/bbl Conflict intraday peak (Mar 9, overnight):  $119.50/bbl     (+64.8% from pre-conflict) Friday March 13 close: $103.14/bbl Today March 15 (9:09 AM CT):  $103.82/bbl     (+43.2% vs. pre-conflict) Down from peak:     -$15.68/bbl  (-13.1% from the Mar 9 high) Sources: Investing.com (WTI NYMEX futures); Pintu News / Reuters (Brent ICE futures, Mar 15 morning); CNBC (Mar 9 intraday peak confirmation). WTI 52-week range: $54.98–$119.48. Today’s WTI trading range: $92.04–$99.32 as of early Sunday morning.

The retreat from the March 9 peak tells its own story. WTI briefly touched $119.48 in overnight trading as the Strait closure was confirmed and Gulf producers began declaring force majeure—maximum fear pricing, built on the assumption of an indefinite total blockade with no policy response. Within hours, President Trump’s comments that the war would “soon be over” and the IEA’s announcement of a historic 400-million-barrel reserve release pulled prices sharply lower. Oil has since settled into the $95–$105 range, reflecting a market that believes the disruption is real but not permanent.

The distance between today’s prices and the March 9 spike is itself a market signal: the worst-case scenario has been partially discounted. The distance between today’s prices and pre-conflict levels ($67 WTI) is the “risk premium” still embedded in the market—roughly $31–$32 per barrel for WTI as of this morning. That premium will compress rapidly if and when credible evidence of Strait reopening emerges, and it represents both the near-term headwind for inflation and the near-term catalyst for an equity rally when it eventually unwinds.

What This Is Doing to Markets

The S&P 500 is down about 3.6% since the conflict began—roughly where our base case said it would be. Oil has pulled back from its March 9 panic high of $119.48 (WTI) and settled into the $95–$105 range, which tells you the market believes this disruption is real but probably not permanent. The question now isn’t what the peak was. It’s how long prices stay elevated and what that does to consumers, companies, and the Fed.

How $100 Oil Moves Through the Economy

At roughly 47% above pre-conflict levels, the pressure from elevated oil prices is spreading well beyond the energy sector:

• Transportation and logistics costs rise immediately, hitting retailers, manufacturers, and food supply chains.
• Gasoline prices at the pump follow within days—a direct hit to consumer purchasing power.
• Airline, trucking, and shipping stocks face margin compression unless costs can be passed through.
• The Federal Reserve faces a stagflationary dilemma: inflation driven by an external supply shock, not domestic demand—making rate cuts politically difficult and rate hikes economically counterproductive.
• International markets, particularly in Asia and Europe which are heavily dependent on Middle East crude, face even more acute pressure.

There is one period in history where a sustained, politically motivated oil supply cut turned into a multi-year bear market and a decade of inflation. The key question is whether the current situation rhymes with that—or whether the world has changed enough that it doesn’t. We address that directly in the section below.

What History Tells Us: Wars and Markets

Conflict is unsettling, but markets have seen a lot of it. The table below covers every major oil-related conflict in modern history. The pattern holds up pretty consistently: sharp short-term pain, then recovery. A few episodes stand out as reminders of what can go wrong when a supply shock is severe and prolonged.

The Gulf War (1990–1991)

When Iraq invaded Kuwait in August 1990, oil jumped nearly 57% in 30 days and the S&P 500 fell more than 10%. But once Desert Storm launched and it became clear that Gulf infrastructure would be protected, the risk premium collapsed almost overnight. Oil fell sharply. The stock market bottomed before the fighting even ended and rallied hard through 1991.

The read-through today: what matters most isn’t how bad things look at peak fear—it’s the moment when the Strait threat is credibly neutralized. That’s when the premium unwinds.

The Iraq War (2003)

By the time the U.S. invaded in March 2003, markets had already priced in the war. Oil actually fell from $36 to around $26 in the first two weeks once the uncertainty lifted. The S&P 500 was up 2.4% a month later. The lesson: markets hate uncertainty more than they hate bad news. Once the path becomes clearer, risk premiums tend to compress quickly.

Russia’s Invasion of Ukraine (2022)

Oil surged past $100 and the S&P 500 dropped more than 7% in the weeks after the invasion. Within a month, equities had fully recovered—even as oil stayed elevated. The energy shock lasted; the equity shock did not.

S&P 500 Returns Around Conflicts With Oil Supply Disruptions

Date	Conflict	1 Week	30 Days	90 Days	180 Days	1 Year
October 19, 1973	Arab Oil Embargo	-0.3%	-13.8%	-22.5%	-30.1%	-43.3%
October 29, 1956	Suez Crisis	1.2%	-3.2%	-3.0%	-1.8%	-12.9%
February 11, 1979	Iranian Revolution	0.9%	1.8%	0.7%	7.8%	20.4%
August 2, 1990	Gulf War (Iraq Inv. Kuwait)	-1.1%	-10.0%	-5.0%	7.4%	21.4%
January 17, 1991	Desert Storm	2.1%	11.0%	11.0%	18.2%	16.6%
March 19, 2003	Iraq War	0.8%	1.7%	15.5%	15.6%	27.0%
February 24, 2022	Ukraine / Russia	1.7%	5.4%	-1.8%	-3.5%	-6.4%
February 28, 2026	Iran War (Op. Epic Fury)	-1.1%	TBD	TBD	TBD	TBD

Source: Vistamark Investments Research. Past performance is not indicative of future results.

Every episode is different. But the table below—covering only the conflicts that involved actual oil supply disruptions—shows that even in the most energy-sensitive events, the market tends to find its footing. The one exception is instructive, and we address it in the next section.

1973 and the Strait: What That Crisis Can and Can’t Tell Us

What Happened

In October 1973, Arab members of OPEC cut off oil exports to the U.S. and several Western allies in retaliation for supporting Israel in the Yom Kippur War. The embargo ran until March 1974. It didn’t close the Strait of Hormuz—but it accomplished something economically similar: it severed a supply line that the Western world had no real backup for.

The U.S. was importing about 30% of its oil at the time, and the entire economy had been built around the assumption that petroleum would always be cheap and available. (Source: Council on Foreign Relations, “Oil Dependence and U.S. Foreign Policy.”) There was no strategic reserve, no shale industry, no global LNG network to reroute supply. When the taps closed, there was genuinely nothing to replace what was lost.

Oil prices went from $2.90 a barrel to $11.65 by January 1974—nearly a fourfold increase in a matter of months. (Source: Federal Reserve History, “Oil Shock of 1973–74.”) Gas lines stretched around blocks. The government rationed fuel. Airlines cut routes. The price shock is estimated to have shrunk the U.S. economy by about 2.5% and triggered a severe recession that ran through 1975. (Source: CSIS, “The Arab Oil Embargo—40 Years Later.”) Equity markets didn’t fully recover in real terms for nearly a decade.

The deeper damage came from what followed: a decade of stagflation. The Fed had no good options. Raise rates to fight inflation and you deepened the recession. Hold rates steady and inflation entrenched. That trapped policy environment is what turned a supply shock into a lost decade for investors.

Why a Repeat Is Unlikely—and What’s Still Worth Watching

The world looks fundamentally different today, and those differences matter a lot for how this plays out.

Where Things Have Changed

In 1973, the Persian Gulf produced roughly 37% of global oil and dominated international trade flows. (Source: The Geography of Transport Systems / Dr. Jean-Paul Rodrigue, Texas A&M; OPEC data showing OPEC’s share peaked at 52% of world production in 1973.) Today that concentration has eased considerably:

• The U.S. now produces 13.6 million barrels per day—a record, and more than it consumes. (Source: U.S. Energy Information Administration, January 2026 Short-Term Energy Outlook.) That’s a complete reversal from 1973. The shale revolution didn’t just reduce U.S. import dependence—it made America a net exporter. A Hormuz closure hurts U.S. consumers through global price effects, but it doesn’t cut off our supply.
• North America now accounts for about 30% of global oil output. (Source: Visual Capitalist / EIA, 2025.) Russia, Canada, Brazil, Norway, and Guyana have all become serious producers. The Gulf’s share of world supply has shrunk meaningfully from its 1973 peak.
• Strategic reserves exist now because of 1973. The IEA was created specifically in response to that crisis. The U.S. SPR held about 415 million barrels entering 2026, and the IEA has already committed to releasing 400 million barrels collectively—the largest coordinated release in history. (Source: U.S. Department of Energy / EIA.) That’s not a permanent fix, but it buys time in a way that simply didn’t exist fifty years ago.
• Oil’s role in the economy has narrowed. In 1973, oil powered electricity generation across the developed world. Today it’s concentrated in transportation and petrochemicals. That limits how broadly a price spike spreads through the economy.

What Hasn’t Changed

The Gulf still matters enormously. The GCC states produce about 22% of global oil supply, and the broader Gulf region including Iraq and Iran accounts for roughly 31% of world output. (Source: Gulf International Forum, “What the Data Tells Us About Hydrocarbon-Producing States,” 2025.) More importantly, these countries hold most of the world’s spare production capacity. They are the swing producers the market has always relied on to fill gaps. In the current conflict, that spare capacity is effectively offline.

Asia is also more exposed than the headline numbers suggest. Japan and South Korea get more than 80% of their oil from the Middle East. China’s Gulf dependency runs 40–45% even accounting for Russian pipeline supply. A prolonged Hormuz shutdown doesn’t just pinch Gulf producers—it slows Asian manufacturing, which flows back into global supply chains and U.S. corporate earnings. In 2024, the Strait handled more than a quarter of all seaborne oil trade. (Source: U.S. Energy Information Administration, 2025.) That number hasn’t shrunk the way the Gulf’s production share has.

A 1973-style lost decade is unlikely because the structural conditions that made that crisis so severe—extreme U.S. import dependency, no backup supply, no policy tools, an economy running entirely on cheap oil—no longer exist in the same form. But a meaningful energy shock with real inflation consequences is already underway, and how long the Strait stays effectively closed will determine how bad it gets. That’s the variable we’re watching most closely.

Three Ways This Could Go

Everything flows from one question: how long does the Strait stay effectively closed?

Scenario 1 — Hormuz Reopens, Conflict Winds Down

U.S. naval forces neutralize Iran’s ability to threaten shipping, the conflict moves toward some kind of endpoint, and tanker traffic resumes. Oil falls sharply—probably back toward $80–$85—as the risk premium unwinds. The S&P 500 recovers recent losses. This is the 1991 Desert Storm playbook, and it’s what markets would reward immediately.

Scenario 2 — Partial Disruption Drags On (Our Base Case)

Shipping stays constrained but not fully blocked. Oil holds in the $100–$120 range. Inflation picks up but doesn’t spiral. Equities stay roughly 5–10% below pre-conflict levels while markets wait for resolution. Duration: another 4–8 weeks. Uncomfortable, but manageable.

Scenario 3 — Full Blockade, Extended (Tail Risk)

Iran keeps the majority of commercial traffic out for months. Oil pushes above $140–$150. Stagflation risk becomes material. Equities face a 15–25% drawdown. We think this is unlikely for the reasons laid out in the previous section, but it’s not zero and we’re managing accordingly.

What We’re Watching

• Hormuz tanker traffic: Windward AI’s daily crossing data is our single most important real-time indicator. Two crossings on March 11 versus a normal 35–40 tells you everything about the current state of disruption.
• Oil price and the risk premium: The roughly $31–$32/bbl gap between today’s WTI price and pre-conflict levels is the market’s best estimate of the disruption. When that gap starts closing, equities will notice.
• Credit spreads: Still our most important early-warning signal for whether this is becoming a real economic crisis. More on this below.
• March CPI: The first inflation report to fully capture the energy impact. We’re watching for second-round effects—energy costs bleeding into core goods and services prices.
• The U.S. dollar: Dollar strength cushions the oil price impact for U.S. consumers but creates drag on international portfolios. We’re monitoring this as it affects our international exposure.
• Jobs and consumer spending: Any sign that $4+ gasoline is curbing consumer activity or pushing layoffs will change the calculus meaningfully.

Credit Spreads: What the Bond Market Is Telling Us

Credit spreads—the extra yield investors demand to hold corporate bonds instead of Treasuries—are one of the more reliable real-time signals of genuine financial stress. Equity markets react fast and ask questions later. The bond market tends to be slower and more deliberate, which makes it a better barometer of whether the economy is actually breaking.

So far, the bond market isn’t panicking. Spreads have widened since the conflict began, but the move has been measured, not alarming.

Investment grade corporate spreads (ICE BofA US Corporate Index OAS) have widened about 15–20 basis points since February 28, moving from historically tight pre-conflict levels around 85–90 bps to roughly 100–110 bps. That’s a real move, but well within normal cyclical range—nowhere near the 150–200+ bps that would signal genuine stress, and far from the 300+ bps seen during COVID or 600+ bps in 2008. (Source: ICE Data Indices / FRED, Federal Reserve Bank of St. Louis.)

High yield spreads have moved more, as they typically do when risk appetite drops. The ICE BofA US High Yield Index OAS is running near 3.1%—up about 40 basis points from 2026 lows. (Source: Lord Abbett, “U.S.–Iran Conflict: Implications for Key Asset Classes,” March 2026; ICE Data Indices / FRED.) That’s still well below the 5–6% historical average that starts to imply real default risk.

The most telling signal is in the lower-rated debt. CCC and below spreads have widened, but there’s been no spike of the kind that typically precedes a default cycle. Blackrock briefly capped withdrawals from one private credit fund in early March, which got attention—but there’s been no broad contagion into the liquid credit markets.

Stocks are worried. Bonds aren’t yet. That gap has historically been the setup for equities to recover once the headline risk starts to fade. When equities sell off sharply but credit markets remain calm, you often see markets climb the wall of worry. That’s the environment we’re in. We’re watching credit spreads closely for any sign that the bond market’s relative calm is starting to crack.

Our Message to You

Oil at $100, a shooting war in the Middle East, a weak jobs number, and an S&P 500 at its 2026 low—markets have a lot to process right now.

But the evidence points toward a disruption that is serious and manageable, not a structural break. Credit markets agree. The historical record agrees. The U.S. energy position in 2026 is genuinely different from 1973 in ways that limit the downside. And history is pretty consistent that selling into geopolitical fear—especially when bonds are still calm and the economy hasn’t broken—tends to be a decision investors regret. We are managing around it.

Our VistaBuilder™ and VistaBalancer™ systems will be running scenario stress tests continuously— including the likely global economic and financial markets impact of a full Hormuz disruption — and will rebalance portfolios efficiently as new information emerges. Where we see opportunity, we will make targeted adjustments; where we see elevated uncompensated risk, we will reduce exposure. We will not make sweeping changes based on headlines. If the Strait of Hormuz situation escalates, the market impact could be significant, and if that happens, our systems will be positioned to respond quickly. We will update you if and when conditions develop materially.

As always, please reach out directly if you have questions about your portfolio or would like to discuss the current environment as it relates to our portfolio in more detail.

 

Matthew Rice, CFA, CAIA

Managing Partner, Chief Investment Officer

mrice@vistamarkllc.com  |   312-895-3001

This communication is for informational purposes only and does not constitute investment advice, a solicitation, or an offer to buy or sell any security. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal. Please consult your Vistamark advisor regarding your individual circumstances.