Oil spike meets Trump's rate-cut push — inflation hedge via energy stocks
Thesis
A flare-up in Middle East attacks has directly threatened the Strait of Hormuz, causing oil to jump as tanker traffic is disrupted. Compounding this supply shock, the White House is actively pressuring the new Fed chairman to cut interest rates despite inflation running above 4%. If interest rates are lowered while a major oil supply route is physically constrained, it creates a classic inflationary setup where dollars weaken just as real energy scarcity increases. This combination of military risk and political pressure for easy money makes energy assets highly attractive.
Strategy approach
Build a rule-based strategy that enters long USO on D1 when front-month WTI crude oil advances more than 2% in a single session. Exit if WTI closes below its 10-day EMA or after a 15-day max hold. Include a 6% trailing stop to lock in gains if the geopolitical risk premium suddenly unwinds.