50 Years of Oil Crises: Five Spikes, Five Reversals
50 Years of Oil Crises: Five Spikes, Five Reversals
The Week Wall Street Panicked
Last week, crude oil futures hit $119 a barrel intraday — one of the largest weekly spikes in decades. The Dow fell 700 points. Money rushed into energy, gold, and defense while tech, airlines, and consumer stocks cratered.
The S&P energy sector is up 24% year-to-date. The consensus trade is simple: buy oil, sell everything else.
I have seen this movie before. Five times in the past 50 years, to be exact. And the ending has been the same every single time.
1973: The OPEC Embargo
Oil went from $3 to $12 — a 4x increase. The term "energy supercycle" entered the lexicon.
It reversed.
1979: The Iranian Revolution
Oil surged from $13 to nearly $40. Iran's production dropped 4.8 million barrels per day — 7% of global supply at the time.
By the mid-1980s, oil had crashed 40%. Investors who bought energy stocks at the top were devastated.
1990: The Gulf War
Saddam invaded Kuwait. Oil doubled overnight. Buying energy was the "obvious" play.
It reversed. Again.
2008: Peak Speculation
Pure speculation drove oil to $147.
Five months later, it collapsed 80%. That is it. That is the whole story.
2022: Russia-Ukraine
Brent hit $130. The NASDAQ dropped 33%. Everyone sold tech and bought energy.
Four months later, oil was back below $100. Investors who bought QQQ at the bottom rode an 87% swing from trough to peak. Energy faded. Tech built wealth.
The Pattern Is Undeniable
Five oil spikes over 50 years. Five reversals. The reactionary trade — buy energy, sell tech — was wrong every single time over the long term.
| Crisis | Oil Spike | Outcome |
|---|---|---|
| 1973 OPEC Embargo | $3 → $12 | Reversed |
| 1979 Iran Revolution | $13 → $40 | Crashed 40% by mid-1980s |
| 1990 Gulf War | Doubled overnight | Reversed |
| 2008 Speculation | Peaked at $147 | Collapsed 80% in 5 months |
| 2022 Russia-Ukraine | $130 | Fell 30% in 4 months |
During major geopolitical shocks, the S&P 500 drops an average of 4.7%, bottoms in about 19 days, and recovers in roughly 42 days. Twelve months after the onset of a conflict, the S&P 500 is higher approximately 70% of the time.
The critical question is not how severe the spike is. It is whether the crisis triggers a recession. This week, Trump signaled that the conflict with Iran could be ending soon. Oil dropped hard. Stocks bounced.
We may already be watching the sixth reversal unfold in real time. The window between peak fear and recovery is where the biggest returns have historically been made. In 2022, that window delivered an 87% swing.
That window is open right now.
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