As the conflict between the United States and Iran escalates, the global economy is once again facing volatile market conditions. Oil prices are rising, and investors are fleeing to shock-absorbing assets such as oil and gold (GCK26).
In a 1979 shareholder letter, Warren Buffett said that while the government is “exceptional at printing money and making promises,” it is fundamentally incapable of “printing gold or producing oil.” Although written nearly five decades ago, this observation remains critically relevant as geopolitical instability pushes investors toward material assets.
As the explosions continue, investors have turned to oil, which has seen prices rise due to reduced supplies. One reason for the current oil market volatility is the effective closure of the Strait of Hormuz. As of early March 2026, the waterway, which typically supplies 20% of the world’s daily marine oil, is unusable for most commercial shipping following threats to burn ships by Iran. These threats led to an 80% drop in traffic.
This physical barrier has immediate economic consequences. Crude oil futures have surged 35% in the past five days while supply has been temporarily shut down. Escalated by US and Israeli actions against Iran, investors are forced to face the fact that promises of energy security mean little when the physical infrastructure of supply is under attack. However, while oil prices are rising, oil companies are collecting more revenue and investors can potentially expect higher returns.
In a 1979 letter, Buffett compared the book value of Berkshire Hathaway (BRK.A) (BRK.B) to the price of gold. He noted that after 15 years of “blood, sweat and tears” and repatriation of all earnings, the company’s inflated book value was still only about the same half an ounce of gold it was bought in 1964. He drew a similar comparison with oil, pointing out that while money can be printed without direct resource issues, precious commodities and precious commodities are scarce.
Warren Buffet
