Oil is at $98 per barrel. Most people see that headline and move on. It's just a number.
It goes up sometimes, it goes down sometimes. Not my problem. But here's what that number actually means.
Oil up 70% in a single year. That's not a market fluctuation. That's a signal.
And the last time oil did something like this in 1973, it triggered the worst economic decade America had seen since the Great Depression. Inflation, recession, unemployment, all at the same time. Most people my age have never lived through that.
Most people have no idea it's even possible. I'm not saying 1973 is happening again. I'm saying the conditions that made 1973 so destructive are closer to today than most financial commentators are willing to admit.
And if you understand why oil is at $98, you understand something important about what comes next. I'm not an expert. I'm just paying attention.
Oil goes up all the time. Supply cuts, demand spikes, refinery outages. There are dozens of reasons oil prices move.
But this move is different because this one comes from the straight of Hormuz. The straight of Hormuz is a narrow waterway between Iran and Oman. At its narrowest point, it is 33 km wide and through that 33 km flows approximately 20% of all the world's oil supply every single day.
Saudi Arabia, Iraq, Kuwait, UAE, Iran, all of their oil exports pass through this choke point. There is no meaningful alternative route for most of it. When the US and Israel struck Iranian nuclear facilities in early March 2026, Iran threatened to close the strait.
That threat alone sent oil from the low60s to nearly $100 in under two weeks. Not an actual closure, just the threat. Think about what an actual closure would mean.
1/5if of global oil supply gone overnight with no substitute available at any price in the short term. S&P Global's analysts ran that scenario. Their conclusion, oil hits $200 per barrel and stays there for months.
$200 oil doesn't stay in the energy sector. It spreads to everything. Food, transport, manufacturing, anything that moves or is made with petroleum products, which is almost everything, gets dramatically more expensive.
That's not a financial crisis. That's a civilizational stress test. There's a word that economists and central bankers hate using, not because it's wrong, because once you say it, people panic.
The word is stagflation. Stagflation is when inflation goes up and economic growth goes down at the same time. It's the worst possible combination for policymakers.
Normally, inflation and recession pull in opposite directions. You fight one with tools that make the other worse. When inflation is high, you raise interest rates to cool spending.
But raising rates slows the economy and increases unemployment. When the economy is slowing, you cut rates to stimulate growth. But cutting rates risks making inflation worse.
Stagflation puts you in both situations simultaneously. Every tool you have makes one problem better and the other worse. You're trapped.
The last time America experienced serious stagflation was the 1970s. The trigger then was almost identical to what we're seeing now. An oil shock from the Middle East that sent energy prices through the roof while the economy was already fragile.
Right now, the data looks like this. Inflation is running above 3% and trending higher as oil prices feed into everything. GDP growth in the fourth quarter of 2025 was just 0.
7%. Consumer sentiment is falling. The Fed held rates steady this week because they can't cut.
Inflation is too high, but they can't raise either because the economy is already slowing. Jerome Powell used the word uncertain 11 times in his press conference. That's what uncertainty sounds like from someone who knows they're out of options.
Here's where this gets interesting and where it connects to something I talked about in a previous video. Remember the petro dollar system? The deal where oil is priced in dollars, creating permanent global demand for US currency.
That system was born directly from a Middle East oil shock. The 1973 OPEC embargo. Nixon had just taken the dollar off gold.
The dollar needed a new foundation. Henry Kissinger flew to Saudi Arabia. The petro dollar deal was made.
Now we're in another Middle East oil shock. And this one is happening while the petro dollar system is already under stress. Bricks expanding.
Countries diversifying away from dollar reserves. Saudi Arabia quietly discussing yuan payments with China. Here's the irony.
High oil prices are actually good for the dollar in the short term. When oil spikes, everyone scrambles for dollars to pay for it. Dollar demand goes up.
The dollar strengthens. We're seeing that right now. The dollar is up roughly 2% in March alone as it plays its traditional safe haven role.
But here's the longerterm risk that most people aren't thinking about. If this conflict drags on, if oil stays at $90, $100, $110, if inflation gets embedded, if the global economy slows sharply, then the pressure on governments to find alternatives to the dollar denominated oil system intensifies. Countries that are already hurting from dollarpriced oil.
Developing nations, BRICS members, countries under US sanctions have even more incentive to build parallel systems to price oil and other currencies to reduce dollar dependence. The petro dollar system has survived every previous shock because there was no alternative. That's less true today than it was in 1973.
The alternatives are immature and imperfect, but they exist. And every oil shock that hurts non-dollar countries is another argument for building them faster. I want to be honest here because this is where analysis gets genuinely uncertain.
Oil shocks are historically bad for risk assets. When oil spiked in 1973, stocks crashed. When oil spiked in 2008, everything sold off together.
Risk off means sell what you can, and crypto is often the first thing that gets sold. We're already seeing some of that. Bitcoin has been under pressure as the conflict escalated.
When people need cash, they sell liquid assets. Bitcoin is liquid. It gets sold.
But there's a longer term dynamic that points the other way. If this conflict accelerates ddollarization, if countries speed up their search for neutral reserve assets, if the petro dollar system weakens faster than expected, then the case for Bitcoin as the neutral alternative gets stronger, not weaker. Gold is already responding.
Gold has been hitting all-time highs. Central banks are buying it aggressively. The flight to assets outside the dollar system is real and visible.
Bitcoin is a harder version of that same trade. Same logic, no government controls it, fixed supply, can't be sanctioned or frozen, but more portable, more divisible, more accessible. Short-term, oil shocks create volatility and selling pressure across all risk assets, including Bitcoin.
Medium to long-term, the forces that oil shocks accelerate, ddollarization, loss of confidence in fiat systems, search for neutral stores of value, all point in Bitcoin's direction. I hold Bitcoin partly because I believe the monetary system is under more stress than the headlines suggest. What's happening right now with oil is more stress, not less.
I keep coming back to the 1970s because I think it's the most honest comparison available. In 1973, oil quadrupled in price due to the OPEC embargo. Inflation in the US hit 12%.
The stock market lost nearly half its value over the next two years. GDP contracted. Unemployment rose.
The misery index, inflation plus unemployment, hit levels that destroyed political careers and shook public faith in institutions. The decade ended with Paul Vulkar raising interest rates to 20% to finally kill inflation. That decision caused a brutal recession, but it worked.
Inflation died. The 1980s recovery began. Here's what's different today versus 1973.
In 1973, US government debt was about 35% of GDP. Today, it's over 120%. In 1973, the Fed had room to raise rates aggressively because the government could afford higher borrowing costs.
Today, every percentage point increase in rates adds tens of billions to the federal interest burden, which is already over $1 trillion per year. Vulkar's solution isn't available in 2026. The debt load makes it politically and fiscally impossible to raise rates to 15% or 20% to kill inflation.
The medicine that cured the 1970s disease would kill the patient today. So what happens instead? History suggests inflation stays elevated longer than it should.
The real value of debt gets inflated away slowly. Savers and bond holders lose purchasing power quietly over many years. The adjustment is slow and painful rather than fast and brutal.
That's not a prediction. That's a scenario that historical parallels suggest is plausible. And it's a scenario that anyone with savings in cash, in bonds, in anything denominated in dollars should think carefully about.
Oil at $98, war in the Middle East, inflation sticky above 3%, growth slowing, the Fed out of good options, markets down four weeks in a row. None of this is a secret. All of it is in the headlines.
What isn't in the headlines is the structural context. The fact that this is happening while government debt is at historic highs. While the petro dollar system is already under pressure, while the Fed has less room to maneuver than at any previous oil shock in modern history, the people who understand that context are quietly repositioning.
Central banks buying gold, some investors increasing Bitcoin allocations, smart money moving toward assets that don't depend on government promises or dollar stability. I'm not telling you to panic. I'm not telling you to sell everything and buy Bitcoin.
I genuinely don't know how this resolves or on what timeline. But I think understanding why oil hit $98. Really understanding it, not just seeing the headline, changes how you think about where your savings should be.
What assets protect you if inflation stays elevated? What happens to bonds and cash if the 1970s comparison has any validity? The number isn't just a number, it's a signal.
I'm Cole. I'm not an expert. I'm just paying attention.
