A shifting landscape of geopolitical tensions is transforming international commodity markets

The Evolving Impact of Geopolitics on Commodity Markets

• Global political tensions have intensified significantly in recent times.

• Although equity markets have largely remained resilient, the landscape for commodities has undergone substantial changes.

• Recent US interventions in Venezuela highlight how shifting geopolitical dynamics are increasingly influencing market behavior.

Despite the relatively calm appearance of stock indices, investors are navigating a new era marked by heightened geopolitical uncertainty.

While stock prices have largely ignored recent global shocks, the commodity sector has been fundamentally transformed by ongoing and emerging conflicts. From the war in Ukraine to unrest in Venezuela, these events have left a noticeable mark on resources such as oil, gold, and copper.

According to Oxford Economics commodity analysts, “Geopolitical factors have always played a role in commodity pricing, but they are now acting as a constant influence rather than a short-term disruption. While sudden events can still cause sharp price swings, markets are increasingly factoring in a persistent risk premium due to ongoing supply chain vulnerabilities, trade fragmentation, and resource nationalism.”

In essence, conflict is now a lasting element in commodity pricing, rather than a fleeting concern for traders.

The researchers further explained that, “Geopolitical risks are now systematically integrated into pricing models, investment strategies, and procurement planning across the commodity sector, rather than being quickly discounted once headlines fade.”

Turning Points in the Commodities Market

Many market participants trace the beginning of this new era to Russia’s invasion of Ukraine in 2022. Since then, the world has witnessed renewed violence in the Middle East, escalating tensions between China and Taiwan, and most recently, the unexpected US operation in Venezuela.

These developments have fueled a surge in gold prices, as investors seek safety amid forecasts of continued instability in the years ahead.

Ongoing hostilities in the Middle East, including clashes between Israel and Iran and the prolonged conflict between Israel and Hamas, have further reinforced gold’s reputation as a safe haven, while also lifting silver prices.

Desmond Lachman, a senior fellow at the American Enterprise Institute, remarked, “We’re entering a period of persistent geopolitical uncertainty. In such times, investors often turn to precious metals for security. Additionally, questions about the reliability of the United States as a partner are adding to the uncertainty.”

Oil’s Divergent Path

Unlike other commodities, oil has not followed the same upward trajectory. Crude prices dropped by 20% in 2025, with the Israel-Iran conflict causing only a brief spike in Brent prices.

Nevertheless, energy investors are once again considering how future conflicts might disrupt markets, especially as the possibility of increased supply from a US-led intervention in Venezuela looms.

Expert Perspectives on the New Commodity Era

Jeff Le, managing principal at 100 Mile Strategies, also believes that commodities have entered a transformative period.

In an interview with Business Insider, he pointed out the rapid changes in the market, noting that not only precious metals but also industrial metals have seen significant price increases.

“The recent surge in industrial metals, with gold surpassing $4,000, marks gains not witnessed in over forty years,” Le stated. “This momentum could signal the beginning of a new phase for commodities.”

Both Le and Lachman emphasized that the US’s actions in Venezuela could set a precedent for future geopolitical interventions, underscoring their significance as key drivers for commodities.

Le added, “The policies of the Trump administration and the rise in global tensions seem to be a defining feature of the current environment. With several more years ahead, it’s likely that geopolitical risk will remain a central—and possibly growing—factor for commodity investors.”