We often talk about how the economy and stock market are related but not the same. Geopolitical conflicts, especially those involving the Middle East, often lead to oil price shocks as supply concerns rise. Higher oil prices can have meaningful effects on inflation, consumers, and businesses as these costs work their way through other parts of the economy. When it comes to the U.S. equity market, the history is more balanced. Average annual returns have been remarkably similar whether oil prices are rising or falling. In fact, the S&P 500 has produced higher average returns in years when oil prices are rising. This may seem counterintuitive, though periods of higher oil and commodity prices often occur alongside stronger economic growth. The current Middle Eastern conflict and its impact on oil prices will be closely monitored, though history suggests oil prices alone has not dictated market direction.