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Navigating the Energy Threat: Five Investment Strategies for an Uncertain Market

When key oil shipping lanes face disruption, the effects don’t stay contained to the region. They ripple outward — showing up at the pump, in the grocery store, and for investors paying attention, in their portfolios.

Geopolitical conflict in the Middle East during the spring of 2026 had curtailed the flow of oil reaching global markets, sending the cost per barrel higher or fluctuating. The energy sector affects investments, and the recent turmoil is real enough to warrant a clear-eyed look at your investment strategy.


Today's Energy Threat Is Not Your Parents' Oil Crisis

This wasn't the first time the world faced an energy shock. In October 1973, an Arab oil embargo triggered by Middle East conflict nearly quadrupled the price of oil — from $2.90 a barrel to $11.65 by January 1974.1 Stocks fell more than 40% in the bear market that followed.1

Yet today's energy picture is different in at least two key ways. First, the U.S. economy now uses roughly 58% less oil to produce the same amount of economic output2 than it did in 1970. That’s in large part because we drive more fuel-efficient vehicles and have shifted away from oil use in other sectors of the U.S. economy.2 Second, a domestic shale boom also drove 90% of the increase in global oil production3 over the past decade — combined with growing clean energy infrastructure — has also made the U.S. far less dependent on Middle Eastern oil than it was in the 1970s.3

Yet that doesn't mean the U.S. economy is immune from potential problems. When geopolitical instability disrupts the flow of oil, the resulting shortage drives prices higher — and the inflationary effects ripple across your investment portfolio in ways that aren't always obvious. While a severe disruption scenario like the major closure of a key oil shipping lane may lead to more modest inflationary effects on the U.S. economy compared to the 1970s,4 modest doesn't always mean negligible. Understanding where inflation shows up in your portfolio is the first step toward managing it.

To mitigate potential losses in your portfolio, there are five investment strategies worth discussing with your financial advisor when energy markets are under strain. These may become frameworks for thinking clearly when the headlines seem to predict economic disaster.


1. Tactical exposure to domestic energy producers

When global supply is disrupted, U.S.-based oil and gas producers often benefit from the resulting pricing environment. They are largely insulated from the instability affecting key shipping lanes. This dynamic played out clearly in 2022,5 when the energy sector surged while every other S&P 500 sector finished the year in negative territory. Some investors add energy funds to their portfolio as a hedge against inflation driven by a surge in energy prices.5


2. Inflation-linked fixed income

Energy-driven inflation erodes purchasing power over time. Treasury Inflation-Protected Securities, or TIPS, are designed for exactly this environment. Traditionally safe-haven investments, their principal and interest payments adjust with the Consumer Price Index, helping to preserve real capital.

Short-duration Treasuries and I-bonds may also be worth examining if a prolonged oil shock keeps pressure on the Federal Reserve to maintain elevated rates. As with any fixed-income decision, especially if it represents a major shift in direction for you, a conversation with your financial professional about fit and timing matters.

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While a severe disruption to energy markets may lead to more modest inflation in U.S. compared to the 1970s, modest doesn't always mean negligible.

3. Gold and hard assets as an inflation hedge

Also considered a safe-haven investment, gold responded directly to energy-driven inflation during the 1970s, and that dynamic has reemerged. Gold has posted strong gains through early 2026.6 Analysts have also identified industrial metals and commodities as investment categories that may help insulate wealth from inflation — assets that behaved differently from stocks and bonds during previous energy shocks.6 Again, a thoughtful allocation to hard assets can serve as a portfolio stabilizer, but the goal is balance, not a wholesale shift.


4. Healthcare as a defensive anchor

One strategy that often gets overlooked in energy-crisis coverage is healthcare sector investing. Healthcare is widely considered one of the market’s most defensive sectors because its demand is largely non-discretionary7 — people don’t typically postpone prescriptions or procedures because the economy is struggling. Healthcare stocks don't usually move in sync with energy markets, making them a smart addition for investors who want to reduce volatility in their portfolio without moving out of stocks entirely.


5. Playing the long game on energy infrastructure

The current disruption is speeding up a shift in how the world produces and uses energy — one already well underway before this crisis began. Experts project that global investment in cleaner energy sources,8 including renewables, nuclear power, energy storage and more efficient power grids, is roughly double that of oil, natural gas and coal.8 For investors who don't need to touch their money for a decade or more, the companies building that infrastructure — renewable energy installations, upgraded electrical grids and next-generation nuclear facilities — may offer an opportunity that outlasts this crisis by years.


The hardest part may be managing your own instincts

Perhaps the most consequential investment decision you’ll make during a period like this isn’t which sector to add — it’s whether to stay disciplined at all. The impulse to sell, move to cash, or reallocate dramatically is powerful during a market disruption, and it’s often counterproductive.

Research consistently shows that investors who react to short-term volatility by exiting the market tend to miss the recovery.9 When markets get volatile, it's easy to fixate on what's going wrong and convince yourself that selling now means you're protecting what you have. But letting short-term fear override the long-term plan you made when you were thinking clearly is one of the most expensive mistakes investors make.

Energy disruptions, like all market disruptions, eventually resolve. The investors who tend to fare best aren’t necessarily those who predicted what would happen. They’re the ones who had a plan, stayed diversified, and resisted the urge to make permanent decisions in response to temporary conditions.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Michael Corbett, “Oil Shock of 1973–74,” Federal Reserve History, November 22, 2013. Accessed May 12, 2026. Back
  2. John Baffes, Shane Streifel and Kaltrina Temaj, “How do current oil market conditions differ from those during the price shocks of the 1970s?,” World Bank Group, January 24, 2024. Accessed May 12, 2026. Back
  3. International Energy Agency, “Oil 2025—Executive Summary,” accessed May 12, 2026. Back
  4. Isaiah Spellman and Xiaoqing Zhou, “Middle East Geopolitical Risk Modestly Affects Inflation and Inflation Expectations,” Federal Reserve Bank of Dallas, August 21, 2025. Accessed May 12, 2026. Back
  5. Kyle Woodley, “The Best Energy ETFs to Buy,” Kiplinger, March 2, 2026. Accessed May 12, 2026. Back
  6. Dan Burrows, “Is Investing In Gold Worth It? How Gold Prices Have Changed,” Kiplinger, March 29, 2026. Accessed May 12, 2026. Back
  7. James K. Glassman, “Why You Should Invest In Healthcare Stocks,” Kiplinger, October 15, 2023. Accessed May 12, 2026. Back
  8. International Energy Agency, “World Energy Investment 2025,” June 2025. Accessed May 12, 2026. Back
  9. Mallon FitzPatrick, “Why Staying Invested Is the Hardest, Smartest Choice Right Now,” Kiplinger, April 10, 2026. Accessed May 12, 2026. Back