Interest Rates, Oil, and the Question Investors Keep Asking

There's a lot going on right now.

Oil at $90+, inflation running hot, interest rates up from two months ago, and a brand-new Fed chair…just to name a few.

And I keep hearing a similar question when talking to investors: where are things headed? Specifically, real estate investors want to know where rates are headed, oil and gas investors where oil is headed.

My response is usually some variation of: I don’t know. Not the most comforting, I know. But I believe it’s the most honest – anyone selling certainty is guessing.

But two pieces I read this week stuck with me. One came from a real estate brokerage and research shop, one from an interest rates advisory shop – and they unknowingly pointed at the same, more useful way to think about a moment like this.

In 1973 the Fed hiked into an oil shock. In 1990 it cut

J.P. Conklin at Pensford Financial Group, the rate advisory firm, went looking for patterns in Fed actions during previous “oil shocks.”

In 1973, an oil embargo sent prices through the roof – they nearly quadrupled. The Fed responded by hiking rates hard, eventually all the way to 10%. In 1990, during the Gulf War, oil spiked again – up about 75% in two months (an even bigger, faster jump than what we’ve seen in 2026). But that time, the Fed cut rates straight through it.

Same kind of event. Opposite decisions.

The difference came down to the economy underneath each one.

In 1973 it was already running hot, so the Fed leaned against it. In 1990 things were already cooling from the S&L crisis, so the Fed moved to protect growth instead.

Conklin’s takeaway? The shock matters, but the starting point matters more.

So where does that leave us today? Looking at things like growth and employment, the economy is sitting roughly on trend. It’s far from overheated, and that puts us closer to the 1990 setup, indicating that the Fed is more likely to hold than to panic (in either direction).

The real estate data points the same direction

Marcus & Millichap, the big CRE brokerage, approached from the property side. And they didn’t sugarcoat the near term.

A rise in interest rates is a real headwind right now – deals that penciled 90 days ago are becoming unworkable. And the gap between what buyers will pay and what sellers will accept, which spent much of the last 12 months narrowing, is again widening.

But their takeaway was that most of this is temporary noise.

The things that actually drive real estate values haven’t changed: the new-supply pipeline keeps shrinking, demand for space is holding, and rent growth is still forecast to strengthen through the rest of 2026.

Marcus & Millichap believes that those fundamentals win out over the long run, headwinds and all. Things were on solid footing before rates jumped.

Which is the same place Conklin landed from the Fed side: the starting point matters more than the shock itself.

What a shock actually tells you about a deal

A sudden move in rates or oil doesn’t create risk in any individual investment…it simply reveals risk that already existed (and may or may not have been planned for).

An apartment deal underwritten with cushion (conservative debt, a rate cap in place, real cash reserves, etc.) can take a 50 bps move and keep on trucking. But a deal that needed rates to keep falling just to make the numbers work is the one now in a more precarious spot.

Any deal that depends on factors out of the operator’s control breaking in its favor (think interest rates, or the price of oil) was fragile from the start.

So when an investor asks me where rates or oil are going, the real question underneath it is usually simpler: will my money be okay?

But that answer was mostly determined before the headlines hit – in how conservatively the deal was put together in the first place.

No one has a crystal ball – and that’s ok

The investors asking “what happens next?” want a forecast. I don’t have one – nobody with any amount of credibility does.

But the forecast itself matters less than you think. A deal that was based on solid fundamentals shouldn’t live or die on the next headline.