Oil Prices, the Strait of Hormuz, and What It Means for Your Retirement Portfolio

When a geopolitical crisis sends oil prices surging, the effects ripple through nearly every corner of the economy — and that includes your retirement savings. On this week’s episode of The Financial Hour of the Tom Dupree Show, Tom Dupree Jr. and Mike Johnson broke down exactly what’s driving elevated oil and gasoline prices right now, what history tells us about these moments, and — most importantly — how Dupree Financial Group is actively managing client portfolios in response. If you’re thinking about retirement or already in retirement, this conversation is one you’ll want to understand.

Why Oil Prices Are Surging Right Now

The immediate cause is the closure of the Strait of Hormuz, a narrow waterway through which roughly 20–25% of the world’s daily oil traffic passes — approximately 8 to 9 million barrels per day. According to U.S. Energy Information Administration data, 89% of that oil is ultimately destined for Asia, with China receiving around 38% and India approximately 14–15%. This isn’t primarily a U.S. supply problem — but it is absolutely a U.S. pricing problem.

As Tom Dupree Jr. explained on the show, American oil — West Texas Intermediate — is priced in a global market. When global supply is disrupted, domestic prices rise regardless of whether the U.S. is importing that oil.

“When the world oil market goes up, our oil goes up regardless of whether we are buying it from anywhere else. So it even affects us here in the U.S., even though we are energy independent.” — Tom Dupree Jr.

The Strategic Petroleum Reserve: A Band-Aid, Not a Fix

A natural question is whether the U.S. Strategic Petroleum Reserve (SPR) can ease the pressure. The short answer: not meaningfully. According to the EIA’s SPR data, the reserve holds oil in 60 salt caverns along the Gulf Coast in Texas and Louisiana, with a maximum capacity of 714 million barrels. As of early March, the SPR held approximately 415 million barrels — representing roughly 125 days of supply — but its maximum release rate is only about 4.5 million barrels per day, a fraction of the daily volume bottlenecked through the strait. It also takes around 13 days for released oil to reach the market.

Mike Johnson put it plainly: this is a supply chain bottleneck, not a shortage of oil.

“Think about what happened during COVID with supply chain issues. This is the same scenario, maybe worse. It just happens to be with oil.” — Mike Johnson

Short-Term Inflation, Long-Term Uncertainty

High oil prices touch virtually everything — plastics, fertilizer, transportation, heating, cooling, and even the energy demands of AI computing infrastructure. Fertilizer inputs, including urea and ammonia, also pass through the strait, creating additional upward pressure on food costs that could affect companies like Caterpillar and John Deere further down the supply chain.

In the short term, elevated oil prices are inflationary. But if the disruption causes a broader economic slowdown, deflationary forces could eventually follow. The FINRA investor education resources regularly caution that geopolitical shocks create exactly this kind of dual-directional uncertainty — and that reacting impulsively can do more harm than the event itself.

The bond market is already reflecting this tension. As Tom noted on the show, the 30-year government bond appears to be heading back toward 5%, as fixed income investors price in the possibility that inflation may not be fully contained — and that the Fed may hold rates steady for the remainder of the year.

What History Tells Us About War and Market Volatility

Mike Johnson reviewed the historical record during the episode, and the findings may surprise you. Historically, market volatility spikes at the onset of a conflict but tends to recover relatively quickly. More instructive is what happens during extreme volatility clusters — periods when large moves, both up and down, happen on back-to-back days.

The 2008–2009 financial crisis is the clearest example. Following the Lehman Brothers bankruptcy on September 15, 2008, the market experienced a sequence of 4–8% swings — up and down — within the same week. As Mike pointed out, those kinds of moves translated to 3,000-point Dow swings, similar to what investors saw on “Liberation Day” earlier this year.

“When you have these clusters of volatility, it shakes all investors to their core. It’s ultimate fear and ultimate greed, literally back-to-back days.” — Mike Johnson

Trying to trade through that kind of volatility is, in practice, nearly impossible. The window to act is measured in hours, not days — and you don’t know which direction the next move will be.

How Dupree Financial Is Managing Portfolios Right Now

This is where personalized portfolio management matters most. Rather than riding out the volatility passively or reacting emotionally, the Dupree Financial team made deliberate, research-driven moves this week.

Trimmed energy positions: The team took partial profits on two energy holdings — one exploration and production company and one large integrated oil company — that had appreciated 15–25% due to the current bottleneck. They did not sell entirely, recognizing that the situation could persist, but reduced exposure to a scenario they cannot predict.
Preserved cash and optionality: The proceeds were partially redeployed into a shorter-term bond position at approximately 3.71% yield, while keeping some in cash to maintain flexibility for future opportunities.
Maintained dividend-paying positions: Most holdings in client portfolios continue to pay dividends, providing income regardless of short-term price swings.
Positioned for potential buying opportunities: If markets experience a capitulation event — a sharp sell-off where stocks become “stupidly cheap,” as Tom described it — having cash on hand means the ability to act rather than watch.

Tom framed the profit-taking this way: trimming energy stocks that had appreciated 15–25% in roughly two and a half months was equivalent to capturing three to four years of dividend income in a single move — a perspective that reframes “selling high” as disciplined income harvesting.

“You let the market tell you when it’s time to sell. We’ve had several positions that we bought at reasonable prices, and over time the market got very, very happy about those particular stocks. And finally it became a compelling thing to let the market have it.” — Tom Dupree Jr.

This approach — owning things at reasonable valuations, monitoring current yield as a measure of risk, and acting when the market offers the opportunity — reflects the investment philosophy Dupree Financial has built its practice around. It stands in contrast to a set-it-and-forget-it mutual fund approach or the kind of mass-market allocation model offered by large national firms that assign clients to counselors rather than connecting them directly to the people managing their money.

Key Takeaways for Investors Thinking About or In Retirement

The Strait of Hormuz closure is a supply bottleneck, not a shortage — oil prices are high because delivery is disrupted, not because oil has become scarce.
Duration is the key variable. The longer the blockade lasts, the deeper the economic impact. The market is pricing in uncertainty because nobody knows the timeline.
Oil companies are not a one-way bet. When the strait reopens, prices could fall sharply — possibly to the $50 range, according to at least one analyst — meaning energy stocks could give back gains quickly.
Volatility clusters. During high-uncertainty periods, large market moves — up and down — tend to happen in rapid succession. Trying to trade them is a losing game for most investors.
Cash has strategic value. Having liquidity during volatile markets means having the ability to buy quality assets at depressed prices — an advantage a fully-invested, static portfolio doesn’t have.
Income-focused investing provides an anchor. When you’re in or approaching retirement, dividends and bond coupons keep cash flowing even when prices are moving unpredictably.

For more perspective on how global markets are moving, visit the Market Commentary archive on the Dupree Financial website.

Frequently Asked Questions How do rising oil prices affect my retirement portfolio?

Higher oil prices can be inflationary in the short term, which may pressure the Federal Reserve to hold interest rates higher for longer. That can create headwinds for both stocks and bonds. For retirees drawing income from their portfolios, sustained inflation also erodes purchasing power. A portfolio built around dividend income, short-duration bonds, and carefully valued equities is generally better positioned to navigate this environment than one relying purely on price appreciation.

Should I sell my energy stocks during the Strait of Hormuz crisis?

Not necessarily — but taking partial profits after a 15–25% run may be prudent, especially in a retirement portfolio. The uncertainty around how long the blockade lasts cuts both ways: prices could go higher, or the situation could resolve and oil could fall sharply. Trimming rather than selling entirely allows you to capture gains while keeping some exposure to a continued rally.

Is the Strategic Petroleum Reserve enough to stabilize oil prices?

No. While the SPR currently holds approximately 415 million...