2026 Iran War & Oil Shock: How I’m Investing Through This Uncertainty

Update (July 2026): I have since reversed the leverage decision described in this post – see 2026 H1 update for the full story.

Sigh…

Here we go again… AGAIN!

I genuinely did not expect to be writing another crisis post so soon after I just wrapped up my 2025 year-end review. Less than three months into 2026, and the Iran war has already given us a full-blown geopolitical crisis, an oil shock, and a market in a panic.

Not tariffs this time. Not a pandemic. An actual war.

Thanks, Mr. President. You are such a stable genius… I am certainly tired of all this winning.

If you’re currently staring at your portfolio in mild horror – I don’t blame you. I’ve been there too. Let me walk you through what’s happening, what I think comes next, and most importantly, what I’ve done (and am doing) about it.

Table of Contents

1. The 2026 Iran War: What Happened and Why Markets Are Falling
2. The Economic Impact: What This Means for Our Portfolios
3. Short-Term Stock Market Outlook: Expect More Volatility
4. Long-Term Outlook: How Markets Recover After Wars
5. My Leverage Dilemma: The Full Story
6. How to Invest During the Iran War: My Strategy for 2026
7. Still Scared? Meet Bob
8. Conclusion

TL;DR: A US-Israel war on Iran has closed the Strait of Hormuz, sent oil to over $120 a barrel, and triggered a global market sell-off of roughly 8-9% since late February. Nobody knows exactly how bad this will get or how long it will last.

My short-term view: more pain is likely.

My long-term view: the market will recover.

My plan: unchanged.

I partially de-risked before the war started, but then levered back up to 1.5x once the market started dropping. I’m continuing to buy as much as I can, as soon as I can, as usual.

The 2026 Iran War: What Happened and Why Markets Are Falling

On 28 February 2026, the United States and Israel launched coordinated airstrikes on Iran under what’s been dubbed “Operation Epic Fury.” The strikes targeted Iran’s nuclear facilities, military installations, and – in a dramatic escalation – the operation resulted in the death of Iran’s supreme leader, Ali Khamenei.

To say this sent shockwaves through global markets would be an understatement. Markets had already been jittery heading into 2026 – the S&P 500 had pulled back from its late-January highs as geopolitical tensions in the Middle East were building – but the actual outbreak of a full US-led war was on a completely different level.

Iran’s response was swift. On 5 March, the IRGC announced it would close the Strait of Hormuz to ships from the US, Israel, and Western allies. A week or so later, Iran’s new leadership doubled down, stating the strait would remain closed.

Just like that, the world’s most important oil chokepoint – responsible for roughly 20 million barrels of oil per day, or about 20% of all global seaborne oil trade – was effectively shut.

Trump initially gave Iran a 48-hour ultimatum to open the Strait or face destruction of their power plants – but has since extended that deadline twice, most recently to 6 April, citing ‘productive talks’. Iran has threatened to target enemy desalination plants if attacked. As of writing, ceasefire negotiations are underway, though no deal has been reached.

As of this writing there are rumours of troops being sent to the Middle East and U.S. bases being evacuated – signalling potential further escalations.

This is not a trade dispute. This is not political theatre. This is an active war with real economic consequences.

The Economic Impact: What This Means for Our Portfolios

If you haven’t been following the news closely, here’s the short version of why the markets care so much about this: the Strait of Hormuz is a narrow waterway that roughly 20% of the world’s seaborne oil supply passes through every day. When Iran effectively closed it to Western-allied shipping on 5 March, oil prices did exactly what you’d expect.

Oil went from around $70-75 per barrel before the conflict to as high as $126 per barrel within two weeks. As of writing it’s hovering around $111–113. I’m no oil market expert, so I’ll leave the detailed forecasting to people who actually know what they’re talking about – but the bottom line is that energy getting significantly more expensive is bad for economies and bad for corporate earnings, which is bad for stock markets.

Past conflicts that caused similar oil price spikes – like the ones in the 1970s and 1990 – led to significant and prolonged market drawdowns. What I take from this is that oil-driven crises have historically been among the types of market events that takes some time to recover from.

I won’t pretend I know exactly where oil prices are headed, how long the Strait stays closed, and how bad plus for how long the economic impact would be. What I can say is this: nobody does. And that uncertainty itself is part of what keeps markets volatile and down.

So what will this mean in the short and long term?

Short-Term Stock Market Outlook: Expect More Volatility

I’m going to be straight with you: I expect more pain in the short term.

Here’s why:

We don’t know how long this lasts. As of 28 March, the situation looks on the verge of further escalation. Nobody really knows what will happen. To say I don’t have much confidence in Trump’s ability to negotiate, make a deal, nor de-escalate would be an understatement. The quality of the people in his administration makes the picture worse not better. The situation remains deeply uncertain and highly volatile.

Oil at $100+ is a major drag on the global economy. If oil stays above $100 per barrel for months – which is entirely plausible – we’re looking at sustained inflationary pressure, potential rate hike discussions, slowing consumer spending, and corporate earnings revisions downward.

Asian market exposure is particularly concerning for us Singapore-based investors. The Strait closure has disproportionately hurt Asian economies. Singapore’s trade-dependent, open economy is inherently sensitive to disruptions of this scale.

The market typically overshoots in both directions. We probably haven’t seen the bottom yet. If the conflict deepens, or if there’s any military escalation beyond what we’ve already seen (which seems likely), expect sharper drops.

I want to be really clear though: I am saying the market is likely to go down more in the short term. I am NOT saying sell everything and go to cash. Those are very different things, and I’ll explain why in a moment.

Long-Term Outlook: How Markets Recover After Wars

Take a breath. Zoom out.

Every major geopolitical crisis in modern history – every war, every oil shock, every market crash – has eventually been followed by a market recovery. Every. Single. One.

The historical data on wars and markets is actually reassuring:

In 20 major post-World War II military conflicts studied, the S&P 500:

• Fell an average of 6% from the initial shock to the trough
• Recovered to pre-conflict levels in an average of just 28 days (yes, in most cases)
• Generated positive returns one year later in 73% of cases

Now, as I noted above, this particular conflict has the hallmarks of an oil-shock event, which is the tougher category. They tend to take longer and cut deeper – but they recover.

The honest answer is: nobody knows when the recovery would be. Which is exactly why you need to keep buying and stay invested – because if you sell, you won’t know when to get back in. Plus the biggest rebound happens at the bottom and you just won’t know when that would be so will likely miss it.

Imagine you sold today and you’re waiting for the bottom – then:

1. The market goes down more, is it the bottom? Should you buy in now or wait for it to go down some more?
2. The market goes up tremendously (which happened last week when Trump made a positive tweet) are you going to FOMO back in?
3. Then the market goes back down again (which also happened when Iran comes out to refute Trump’s claims), are you going to sell again?
4. Then the market goes up again, will you feel uncertain since it jumped before and then tank again? But what if the real recovery this time?

Every market drop will make you question whether it’s the bottom.

Every market jump will make you feel like a dead cat bounce… OR it’s a real recovery!

You just won’t be sure until the real recovery is already under way.

And if you’re waiting for certainty before getting back in, you’ll have missed the recovery.

If you want to dive deeper into the historical data on how markets have performed after wars, these are worth reading:

• How Modern Wars Affected Market Performance and Volatility — MSCI
• Military Conflicts May Rattle Markets, But Not for Long — Hartford Funds
• Military Conflicts Have Not Derailed Long-Term Growth — Invesco

The long-term story hasn’t changed: global equities, broadly diversified through index funds like VWRA or IWDA, will trend upward over the long term. Wars, pandemics, financial crises, oil shocks — they all become tiny blips on a 30-year chart.

My Leverage Dilemma: The Full Story

Okay. This is the section I suspect many of you are most interested in. Because my situation is a little more complicated than your average index investor.

Obligatory Warning: Using leverage for investing is extremely risky and can wipe out your portfolio if you don’t know what you’re doing. This post is not intended to be a recommendation for anyone to use leverage. If you’re considering leverage, ensure you’re fully informed about the risks and have a clear plan before jumping in.

On this note, I only use leverage for my own portion of the investment portfolios. While I also invest for my wife, her portfolio is invested in similar global indexes but is leverage-free (and thus lower risk).

If you’d like to read how I started using leverage, my reasoning, and how it’s performed so far, you can read these posts in chronological order.

As you know from my 2025 year-end post, I ended the year with a ~S$3.37M net portfolio and a 1.5x leverage ratio – meaning about S$1.64M of my holdings are funded by borrowed money.

I’m also, for the first time ever, genuinely close to my FIRE number (not familiar? here’s how I calculate mine). That changes the calculus quite a bit. With a larger portfolio, even a -10% drawdown represents hundreds of thousands of dollars. And with leverage amplifying the downside, the stakes are meaningfully higher than they were a few years ago.

So let me walk you through exactly what went through my head as this crisis unfolded – because it was not a clean or easy thought process.

Stage 1: The FIRE-Proximity De-Risk (Before 28 Feb)

As the year started, even though I was completely oblivious to any potential conflict with Iran, I was already feeling uneasy and thinking hard about whether to reduce my leverage.

The market was heading ever higher and my portfolio hit its all time high of SGD 3.5M earlier on 17th January and VWRA crept up towards its high of USD 178 per share in late February.

Everything seemed pretty rosy, so why was I feeling uneasy?

Well, the core driver is my proximity to my FIRE number. At its peak, my portfolio was within 5% of my personal FIRE number, less than SGD 200,000 away. I was so close I could almost taste it!

Therefore I was thinking more about capital preservation than I was a year ago, and the dilemma of maintaining a high-risk high-return setup to potentially reach the goal faster vs a low-risk but also low-return approach becomes even more pronounced.

Another factor I considered was also the fact that I needed to start retirement with 0 leverage – so it was an important decision whether to de-risk gradually over time until I hit 0 leverage at the same time I hit my FIRE number (much more measured and conservative approach but less aggressive), or wait until I fully reach my FIRE number before de-risking and removing leverage all at once (very aggressive but also high risk.)

Plus it would give me dry powder to invest if the market did crash in the future – a win-win.

So I made a decision: On 10th February, I sold approximately SGD 150,000 of VWRA and used the proceeds to cover (reduce) my leverage. This brought my leverage ratio down meaningfully (to about 1.43x) and gave me a higher crash buffer – the cushion between my current portfolio value and the point at which I’d face a margin call.

Was this “timing the market”? Technically, yes. But my reasoning wasn’t “the market will definitely crash.” It was: “I’m close to my FIRE number, I need to slowly reduce risk in a systematic way as I approach it rather than going all guns blazing until the end and then quit cold-turkey.” It was a much more sane approach to deleveraging.

I honestly debated this for weeks. On one hand: reducing leverage means I miss out on upside if the market keeps going up. On the other hand: with leverage near 1.5x and a portfolio at this size, a significant drawdown could be psychologically brutal even if I was never technically at risk of a margin call. The 2025 Trump tariffs experience taught me that even a theoretically “safe” position can be deeply uncomfortable when your portfolio is swinging by six figures in a day.

I decided the cost of reduced upside was worth the improved ability to sleep at night even if it was by just a little bit.

Turns out that was a great call… just wish I’d sold a lot more than SGD 150,000!

Stage 2: The War Starts – All Hell Broke Loose

Then on 28 February, the missiles flew and everything changed.

As the market started dropping, my first instinct – and I’ll be honest here because this is exactly what happened – was to seriously debate whether I should dip back in to my leverage to buy the dip. “Markets are dropping! Prices are lower! This is an opportunity! Deploy more leverage!”

And then my more sensible brain intervened: “Dude, we literally just sold to cover our leverage because we wanted a gradual risk reduction path towards our FIRE number. The world is more uncertain now, not less. It doesn’t make sense to reverse that decision now that a literal war just started!”

However, the lizard brain replied: “Yeah but this is exactly why you reduced risk in the first place. So that you have dry powder available in case a big drop happens!”

This internal back-and-forth was genuinely exhausting. The FOMO of watching prices drop without buying more aggressively is real. The fear of deploying leverage into a falling market – especially an oil-shock-driven falling market with no clear timeline for resolution – is also real.

Stage 3: The Decision – Lever Back Up

⚠️ Update (July 2026): I reversed this decision shortly after publishing. Within days of this post going live, feedback from readers and peers prompted me to relook at this plan through a more risk-aware lens. Having effectively reached my FIRE number, I concluded the risk-reward payoff no longer justified the leverage, and I fully deleveraged by the end of April 2026. The reasoning in this post reflects my thinking at the time, but no longer represents my leverage position. I cover the full story – including what the reversal cost me when the market recovered – in my 2026 H1 update.

Ultimately, here’s where I landed and my reasoning.

As the market dropped, similar to previous crashes, it became more sensible to gradually deploy leverage into the drop to re-enter the market at prices that have fallen below where I first sold, but make sure I do not go above the level of leverage I had previously.

My conclusion: Lever back up to roughly the amount of leverage I had before de-risking.

Here’s why:

1. My 1.5x target with a 50% crash buffer is my long-term conviction. That strategy was designed to survive crashes. A 6-7% market drop is not a crash. It might become one – but right now, I’m well within my safety margins.
2. Buying during a downturn is EXACTLY when leverage is supposed to be deployed. If I only lever up when markets are at all-time highs and reduce when they drop, I’ve reversed the entire logic of the strategy.
3. Time in the market still beats timing the market. Even in a crisis. Even with oil at $120. Even with a war. The historical evidence for this is overwhelming.
4. I can’t predict the bottom any more than I could predict the top. My plan was never to time this perfectly. It was to maintain my target allocation and keep buying.
5. Achieves same or lower risk level compared to all-time-high. Since we were at 1.5x leverage and 50% crash buffer with a certain dollar amount in loans at all-time-highs, gradually levering back up as the market drops until I reach the same total loan dollar amount pre-de-risking means we are hitting the same risk level as that point-in-time, but with lower stock entry price.

Here’s the timeline, loan balance, and VWRA prices when I de-risk, and re-levered and where VWRA is now:

Now, am I 100% comfortable? No.

Was the timing great in hindsight? Also no, the market continued to decline after I levered back up.

This situation is deeply uncertain in a way that Trump’s tariffs – as chaotic as those were – never quite were. A trade war has economic off-ramps. An active war with no clear end in sight is harder to model.

But the alternative – sitting on the sidelines waiting for certainty – would mean missing the recovery when it comes. And the recovery will come.

How to Invest During the Iran War: My Strategy for 2026

Despite everything I’ve just written – all the deliberation, the de-risking, the re-leveraging, the stress – if you’re not using leverage, the core message is much simpler:

As long as you have at least 6 months of emergency funds and cash for any short-term needs covered – then continue to buy as much as you can, as soon as you can, as usual.

That’s it. No clever tactical overlay. No “wait for the bottom.” No switching to gold or cash or whatever the fear-driven financial media is recommending this week.

Every month, when salary hits: buy VWRA.

Max out SRS before the end of the year: buy Amundi MSCI World Fund.

CPF OA each month: buy Amundi MSCI World fund.

Same as 2025. Same as 2024. Same as every year since I started this journey.

The complexity of my leverage decisions notwithstanding, my fundamental investment behaviour doesn’t change based on headlines.

If anything, I want to take advantage of lower prices while they last. Because – as Warren Buffett once said:

Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.

Is this the golden rain moment? I genuinely don’t know. It will probably get worse before it gets better. But I do know that at some point in the future, today’s prices will look cheap. They always do, in retrospect.

Still Scared? Meet Bob

Okay, I know some of you are reading all of this and thinking: “FPL, that’s easy for you to say – you have a S$3M+ portfolio! I’m still building mine and watching it drop is painful.”

I hear you. I genuinely do.

So let me tell you about Bob – the world’s worst market timer.

Bob’s story is one of my all-time favourite investing parables, told brilliantly by Ben Carlson at A Wealth of Common Sense. Here’s the short version:

Bob starts investing in 1970 at age 22. He’s a diligent saver but absolutely terrible at timing the market. Through terrible luck (or stubbornness), he manages to invest his savings only at the absolute worst possible moments — right before every major market crash:

• He dumps his savings into the market in December 1972, just before the brutal 1973-74 crash that saw the market drop nearly 50%.
• Then he does it again before the 1987 Black Monday crash.
• Then before the Dot-com crash.
• Then before the 2008 Global Financial Crisis.

Every. Single. Time. Worst possible timing.

And yet – he never panicked. He never sold. He just held on, kept contributing, and let time do its thing.

By the time he retired in 2013, Bob had turned roughly $184,000 of lifetime contributions into $1.1 million.

Bob invested at LITERALLY the worst possible time, over and over again, and still made money. Because he stayed the course.

Now imagine if, instead of investing at market peaks, you invest regularly – including during crashes like this one. The outcome is even better.

This war will end. Oil prices will normalise. Economies will adapt. Markets will recover. They always have.

And if they don’t, any other forms of investments short of ammunition and canned food wouldn’t save us anyway.

The biggest risk isn’t the market crashing. It’s you selling at the bottom and missing the recovery.

Conclusion

So where does that leave us?

The world is in a genuinely difficult place right now. A war in the Middle East, oil prices spiking well above $100 a barrel, markets in decline, and no clear timeline for resolution. I won’t pretend otherwise, and I won’t try to convince you that this isn’t bad.

But I’ve invested through a pandemic. Through 2022’s brutal rate-hike bear market. Through Trump’s Liberation Day chaos. Through every “the world is ending” moment since I started this journey.

And every single time, the message has been the same:

Markets will be volatile. Markets can and will crash significantly in the short term. That’s expected. That’s normal. The long-term expectation remains unchanged: the market will recover, and those who hold on – and keep adding – will be rewarded.

My leverage strategy has been noisier than usual through this crisis, and I’ve shared my full thought process above because I think it’s useful – not as a template to copy, but as a window into how a real investor navigates real uncertainty. Not perfectly, not calmly, but methodically.

My approach for the rest of the year: unchanged.

Buy as much as I can. As soon as I can. As usual.

Stay the course.

What about you? How are you navigating the current market volatility? Are you staying the course, adding more, or pulling back? Let me know in the comments below.

Until next time, stay the course!
FPL