Oil, Gold, the Fed, and Food Prices

The Big Story: Oil, the Strait, and Your Cost of Living

On February 28, the US and Israel launched joint airstrikes on Iran. The Supreme Leader was killed in the opening hours. Iran retaliated across the Gulf, hitting targets in Saudi Arabia, Bahrain, Kuwait, Qatar, and the UAE. Hezbollah entered the conflict from Lebanon. The Strait of Hormuz — the narrow waterway through which roughly 20% of the world's daily oil supply passes — is effectively closed. Over 100 tankers sat idle near UAE and Oman within 48 hours of the first strikes.

As I write this, the fighting is still ongoing. The UN Security Council has condemned the attacks from both sides. Airspace across the region is closed or restricted. Several major airlines have suspended Middle East routes entirely. Three AWS data centres in the UAE were damaged by drone strikes, which knocked out chunks of the region's web infrastructure. If you have been having trouble accessing a Gulf-based banking app or fintech platform this month, that is probably why.

For those of us living and working in Southeast Asia, this is not happening in a different world. Many of my clients have colleagues or family in the Gulf. Some hold assets administered through UAE or Bahrain-based platforms. Some are flying through Dubai or Doha regularly for work. The logistics of daily life have been disrupted for a lot of people we know.

Oil is at $103 a barrel. Brent briefly touched $120 earlier this month before pulling back. The IEA has cut its global oil demand growth forecast and warned that nearly 20 million barrels per day of crude and product exports are currently disrupted. There is no quick fix here. Until tanker traffic through Hormuz resumes at scale, prices stay elevated.

What does that mean specifically? It depends on where you live. Malaysia is a net oil and gas exporter. Higher prices improve Petronas revenues and the government's fiscal position. The ringgit has strengthened to 3.94 against the dollar, its best level since mid-2018, making it Asia's top-performing currency this year. If you are based in KL earning in foreign currency, your local purchasing power has dipped slightly, but the country around you is doing well.

Singapore and Thailand are net importers. Fuel, transport, and logistics costs are climbing. That feeds into food prices, utilities, and the everyday cost of running a household. If your retirement projections were built on 2024 cost-of-living assumptions, they need revisiting.

Here is one most people have not thought about yet: food. The Strait of Hormuz does not just carry oil. Nearly 50% of the world's urea and sulphur exports pass through it, plus 20% of global liquefied natural gas, which is a key input for nitrogen fertilisers. The World Food Programme has already flagged the risk of significant, long-term food price increases. Northern Hemisphere spring planting is happening right now against a backdrop of fertiliser shortages and spiking input costs. That will not show up in your grocery bill tomorrow, but it will by the second half of this year.

What Else Is Moving

The rate outlook has changed materially. The Federal Reserve meets on March 18. Markets are pricing in a near-100% probability that they hold rates at 3.5-3.75%. Before the conflict, the expectation was a June cut, maybe a second one in September. That is gone. Goldman has pushed their next cut forecast to September. Traders are now pricing in only one cut for the whole of 2026, in December, if at all. Oil-driven inflation has shut the door on easing.

For anyone with a UK pension decision sitting open, this matters. A DB transfer, a CETV valuation, a QROPS timing question — the interest rate picture today is meaningfully different from what it was six weeks ago. Bond yields have moved. That changes the maths. Not a reason to panic, but a reason to stop letting it drift.

Gold is trading around $5,020 as of Friday. It hit an all-time high of $5,595 back in January — up more than 100% in 12 months. Central banks are still buying aggressively. JP Morgan forecasts $5,055 by year-end; Deutsche Bank has a $6,000 target. The question I keep getting is whether to buy more at these levels. My honest answer: if you already own some as part of a diversified allocation, sit tight. Gold is doing what it is supposed to do right now, acting as insurance during exactly the kind of event it exists for. If you do not own any, a small allocation — 5 to 10% of your portfolio — still makes sense, but do not chase it. The worst financial decisions are made in the first two weeks of a crisis, and we are in that window.

The Expat Takeaway

The broader point is one I keep coming back to. Three things most expats treat as separate — where your income is earned, where your savings sit, and where you actually spend — are rarely aligned by default. Weeks like this have a way of making that visible. If you have not looked at how your financial geography maps onto your actual life recently, this is the week to do it.

And as always: make sure your emergency reserve is intact. Six months of liquid, accessible funds, in a currency you can actually use. That does not change regardless of what oil does or what the Fed decides.