U.S. Iran Tensions Send Oil To Seven-Month Highs

"If something happens there, and you look not just at Iran but at everyone who could get involved, a real war wouldn't be limited to just two countries. People forget that when Russia invaded Ukraine in early 2022 and there were concerns about oil disruptions, crude went above $100 a barrel. Gasoline went to $5 a gallon. That was highly inflationary."

"The other side effectively controls that chokepoint. About 20% of the world's crude transits there. If there's even a credible threat of shutting it down, you don't need direct conflict. Tanker operators and oil companies may simply refuse to pass through, which would sharply increase oil prices."

"Two of the best-performing stocks this year have been Chevron and Exxon Mobil because investors were attracted to the dividends. At one point, Chevron's dividend yield was close to 5%. Exxon's was near 4% in late summer or early fall. Investors saw stable global oil majors offering strong yields and allocated capital there."

U.S. military presence in the Mediterranean has reached levels unseen since the Iraq War, with two carrier groups deployed amid escalating tensions. The Strait of Hormuz serves as a critical chokepoint through which approximately 20% of the world's crude oil transits. Even credible threats of closure could cause tanker operators and oil companies to avoid the route, sharply increasing oil prices without direct military conflict. Historical precedent shows that geopolitical disruptions cause significant oil price increases—crude exceeded $100 per barrel during the 2022 Ukraine invasion, pushing gasoline to $5 per gallon. Oil majors like Chevron and Exxon Mobil have attracted investor capital through high dividend yields, benefiting from elevated oil prices and geopolitical uncertainty.

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