Remember when oil prices spiked and everyone was asking if it would hurt the stock market? That whole situation back in late February was actually a textbook case of how geopolitics can shake investor confidence in minutes.

So here's what went down. After the strikes on Iran, crude jumped about 7% pretty quickly. Brent was sitting around $71 a barrel—up $9 from just a month before. The real kicker? Prices briefly shot up to $80 over the weekend as traders got nervous about supply disruptions.

The reason everyone was watching oil so closely comes down to one chokepoint: the Strait of Hormuz. About a fifth of the world's oil flows through that narrow passage, and if that gets disrupted, you're looking at a serious supply crunch. That's why even the threat of escalation sends crude prices up fast.

Now here's where it gets interesting for the stock market. JPMorgan Chase ran the numbers and said if this conflict stretched beyond three weeks, Brent could spike to $110-120 a barrel. That's the kind of price that would actually hurt the broader economy—higher gas prices squeeze consumer spending, inflation ticks up, and stocks typically get hit hard in that scenario.

The market reaction was pretty telling. The S&P 500 opened down about 1% that Monday morning but recovered by close to end flat. Most analysts were quoting scenarios ranging from best case (short, contained conflict) to worst case (prolonged campaign with Hormuz partially or fully closed). Fitch was betting on the middle ground at that time.

The short version? A quick conflict was manageable for stocks. But if it dragged on, the pain would show up in equity prices. Fortunately, things didn't escalate into that prolonged scenario, but it was a good reminder of how fragile supply chains are and how fast oil shocks can ripple through markets. These kinds of geopolitical risks are exactly why diversification matters—you never know what's coming next in the global economy.