A military strike thousands of miles away shouldn’t affect the cost of filling your car in the UK.
But it does.
When tensions rise around the Strait of Hormuz – one of the world’s busiest oil shipping routes – the effects ripple across the global economy. Fuel prices climb, businesses face higher costs, and over time, everyday essentials become more expensive.
Most headlines focus on oil. Financial markets often focus on gold.
At TallyMoney, we think there’s a more important question.
What happens to your money?
Because while markets react to today’s news, the lasting impact of events like these is often felt much closer to home – in the gradual erosion of your purchasing power.
Why the Strait of Hormuz matters
The Strait of Hormuz is a narrow stretch of water linking the Persian Gulf to the Arabian Sea. It may be small on a map, but it plays an outsized role in the global economy.
During the first half of 2025, around 20.9 million barrels of oil passed through the Strait every day – roughly 20% of global petroleum consumption and around a quarter of all seaborne oil trade.
There are only limited alternatives if shipping through the Strait is disrupted.
That means markets don’t wait for oil supplies to stop completely. Even the possibility of delays or restrictions is enough to send prices higher as traders anticipate future shortages.
Following the latest escalation involving the US and Iran, that’s exactly what happened. Brent crude climbed as markets priced in the increased geopolitical risk.
The chain reaction most people never see
Higher oil prices don’t just affect motorists.
Almost everything we buy has travelled somewhere.
Food is transported by lorry. Raw materials are shipped around the world. Supermarkets rely on refrigerated distribution networks. Manufacturers consume energy at every stage of production.
When fuel becomes more expensive, those costs begin working their way through the economy.
At first it’s almost invisible.
Then transport costs increase.
Businesses adjust prices.
The weekly shop costs a little more.
A family holiday stretches the budget a little further.
Your energy bill edges upwards.
Individually, none of these changes feels dramatic.
Together, they’re inflation.
Not simply a figure announced each month by economists, but the steady reduction in what your money can actually buy.
So, why didn’t gold rise?
Whenever geopolitical tensions escalate, many people assume gold will immediately become more valuable.
Sometimes it does.
But markets are rarely driven by a single story.
This time, investors quickly shifted their attention to something else: what higher oil prices could mean for inflation and interest rates.
If rising energy costs keep inflation higher for longer, central banks are less likely to reduce interest rates. Higher rates generally make cash savings and government bonds more attractive in the short term, while expectations of higher US interest rates can strengthen the dollar.
Because gold is priced globally in US dollars, a stronger dollar can reduce demand from overseas buyers, creating downward pressure on its price.
That’s why gold briefly moved lower, despite growing geopolitical uncertainty.
It’s a reminder that short-term market movements often reflect several competing forces at once.
Looking beyond the daily price
It’s easy to become absorbed by whether gold is up or down on a particular day.
But daily price movements rarely tell the whole story.
Over the long term, many people choose to hold physical gold for a different reason altogether.
Not because they expect tomorrow’s price to be higher. But because they want to preserve purchasing power over time.
That’s an important distinction.
The conversation isn’t really about predicting markets. It’s about asking what you want your money to do.
Money isn’t just a number on a screen
Most of us measure our finances by looking at a bank balance.
If the number hasn’t changed, it’s easy to assume our wealth hasn’t either.
But that’s only half the picture.
The real measure of money isn’t how many pounds appear in your account.
It’s what those pounds can buy.
If your savings purchase less food, less fuel and fewer everyday essentials than they did a year ago, your purchasing power has fallen – even if your balance looks exactly the same.
Inflation rarely announces itself dramatically.
It usually arrives quietly, one price rise at a time.
A different way of thinking about money
Global events will always create uncertainty.
Oil prices will rise and fall.
Interest rates will change.
Markets will react.
Those things are outside any of our control.
The more useful question is what happens next.
How do you hold onto the value you’ve already worked hard to build?
For many people, physical gold has long been one answer to that question.
At TallyMoney, we believe it’s worth thinking even more broadly.
Rather than asking whether gold will be up or down tomorrow, ask yourself something simpler:
Will the money I hold today still buy the same amount tomorrow?
Because when you start thinking about money in terms of purchasing power, rather than just the number on your bank statement, global headlines begin to look very different.
