The Butterfly Effect: I Helped Build Oil Tankers — Now Their Cargo Moves My Portfolio

I spent eight years commissioning ships — cargo and ballast systems, mostly — and one thing that never left me from that job is a healthy respect for how one small failure far away can ripple into something much bigger, much closer to home. A cracked valve on a test bench in Korea. A delay on a sea trial off some coast I’ll never visit. Small events, big downstream effects.

I got a reminder of that same lesson this week, except this time it wasn’t about ships — it was about a ceasefire.

A Narrow Strait, Eight Thousand Kilometres Away

This week the trigger wasn’t mechanical. Tension rose again in the Gulf — the kind that doesn’t close a shipping lane, but makes everyone price the possibility that it might. Diplomatic talks were reportedly still planned, which is genuinely better than the alternative, but “still talking” and “stable” are two different things, and oil markets are unusually good at telling them apart.

I’m not going to write about the politics of it. I don’t have any expertise there, and this isn’t that kind of blog. What I do know something about is the physical layer underneath it — the vessels, the cargo, and the narrow places they have to pass through. So that’s the part I’ll trace.

Why I, an ETF investor with zero energy stocks, still pay attention

The Chain, Link by Link

“Geopolitics affects markets” is the kind of sentence that explains nothing. What I wanted to understand was the actual sequence — the equivalent of tracing a failed system back through the pipework until you find the valve.

Here is the chain, and every link is ordinary once you see it.

1. A shipping route gets riskier. Not blocked, usually — just riskier. That’s enough. Insurance premiums for vessels in the area rise, some operators reroute, voyages get longer.

2. Oil gets more expensive. The Strait of Hormuz alone carries around 20% of global petroleum liquids consumption and about a quarter of all seaborne oil, according to the US Energy Information Administration. Traders don’t wait for a disruption to price the possibility of one.

3. Oil is an input to almost everything. This is the link people underrate. Fuel isn’t just what goes in a car — it’s freight, plastics, fertiliser, packaging, and the cost of moving every physical object you buy. A higher oil price leaks into thousands of unrelated prices over the following months.

4. Which shows up as inflation. Not immediately, and not evenly, but it shows up.

5. Which changes what central banks do. Higher inflation means rates stay high, or go higher. And that is the link that finally reaches me.

6. Which reprices every share I own. Higher rates mean future company earnings are discounted more heavily, and are therefore worth less today — including the earnings of hundreds of companies with no connection whatsoever to shipping lanes. I’ve written about that discounting mechanism in my post on why bad jobs news can lift stocks.

Six links. A tanker route and my retirement account, connected by nothing more exotic than the price of moving things.

I Helped Build the Ships That Carry This Cargo

I want to dwell on the second and third links, because that’s the part I know from the inside rather than from reading.

For eight years I commissioned commercial vessels — crude oil tankers and LNG carriers — working mostly on cargo and ballast systems. Commissioning means proving every system works before anyone trusts it with a full load. So when I write about oil moving through a strait, I’m not describing an abstraction I read about. I signed off on the pumps and the valves on ships built to do exactly that job.

There is something genuinely strange about that. The same cargo I spent years making it possible to move safely now reaches me a second time, years later, as a number on a retirement account statement. I never expected those two parts of my life to touch.

What that work actually taught me was about failure. Not the dramatic kind — the mundane kind. A sensor reading slightly wrong. A valve that seats at 98% instead of 100%. Individually trivial. You chase them anyway, because systems rarely fail at the obvious weak point; they fail where a small fault meets a busy moment.

Global trade has the same shape. It runs at high utilisation, with very little slack, through a small number of narrow places. That efficiency is why goods are cheap. It’s also why a disturbance at one chokepoint doesn’t stay local — there’s no spare capacity to absorb it, so it comes out as price instead.

Two habits from that job survive into how I invest. Respect the chokepoint — when one passage carries a fifth of something the whole world runs on, that’s a permanent design characteristic, not this week’s news. And never mistake a quiet system for a robust one. Most of the time nothing goes wrong, which tells you almost nothing about what happens when it does.

The risk I can’t control, and the one thing I can

I wrote a while back about how I handle the risks I can’t control, and this is a perfect real-world case of it. I have no ability to influence what happens between Tehran and Washington, no way to predict whether this ceasefire holds through the week, let alone the year. What I can control is how exposed I let myself become to any single outcome.

That’s exactly why I don’t try to “position” my portfolio around geopolitical headlines — buying energy stocks because oil might spike, or pulling money out because a ceasefire looks shaky. My holdings stay diversified and boring on purpose: broad U.S. market funds, bought on the same schedule every month, regardless of what’s happening in the Gulf that week. If oil spikes and the market wobbles, my next scheduled purchase just buys a little more for the same amount of money. If it doesn’t, I’ve lost nothing by not guessing.

Ships taught me that you can’t always prevent the small failure far away. You can only make sure your own system is built to absorb the shock instead of amplifying it. My investing approach is built the same way.

So What Do I Actually Do? Nothing — and That’s a Decision

Having traced all six links, the honest conclusion is that I take no action, and I want to explain why that isn’t laziness dressed up as philosophy.

To profit from this chain I would need to be right about four separate things in sequence: that the disruption happens, that it lasts, that it moves inflation enough to matter, and that markets haven’t already priced it in. Miss any one and the trade fails. And the last is the killer — by the time I read a headline, people whose entire job is this have already acted on it.

There’s also the uncomfortable truth that buying energy exposure after an oil spike is buying the thing that has already gone up, for a reason that may resolve next week. That isn’t a hedge; it’s a late bet.

So my payday transfer runs on the same day for the same amount. What actually changes is smaller and, I think, more useful: I understand why my portfolio moved, which is the difference between an unsettling week and an alarming one. Understanding is not the same as acting, and confusing the two is how ordinary investors get hurt.

Questions I Get Asked

Should I own energy stocks as insurance against this?
It’s a real strategy, and I don’t hold them. The reason is that it only helps if I own them before the shock, which means holding a concentrated sector bet for years in exchange for occasional protection. Broad index funds already include energy companies; I just don’t overweight them.

Do markets usually recover from geopolitical shocks?
Often they do, and reasonably quickly — but I’m wary of that reassurance, because it’s built on the shocks that stayed contained. The ones that didn’t look identical at the start. “It always recovers” is a description of the past, not a promise.

Does a higher oil price hurt every company?
No — it transfers money rather than destroying it. Energy producers gain, transport-heavy and manufacturing businesses lose, and consumers spend more on fuel and less on everything else. Owning the whole index means owning both sides of that transfer, which is precisely the point.

Isn’t it exhausting to follow all of this?
It would be if I followed it for decisions. I follow it out of curiosity, the way I still read about ship systems I no longer work on. The moment I notice myself wanting to act on it, that’s the signal to close the tab.