Ongoing tensions in Iran and risks in the Strait of Hormuz have increased both prices and volatility in commodities, particularly oil. We continue to see potential for commodity price increases, driven by fundamental factors, supply-demand imbalances, and additional geopolitical risks. Maintaining an allocation to commodities, with an emphasis on active management, can help investors protect against inflation and energy supply disruptions. The shock is global, yet asymmetric. Energy importers are more exposed than exporters, poorer countries more than richer ones, and those with meagre buffers more than those with
The war is significantly altering supply chains for non-energy and critical inputs. Rerouting tankers and container ships increases freight and insurance costs while also lengthening delivery times. Disruptions in air traffic around key Gulf hubs affect global tourism and add further complexity to trade. Alongside rising commodity prices, countries, companies, and consumers are already contending with the challenges posed by these supply chain disruptions. With approximately one-third of fertiliser shipments now passing through the Strait of Hormuz, concerns about food prices are rising. This interruption in the supply of crop nutrients from the Gulf coincides with the planting season in the Northern Hemisphere, jeopardising crop yields and harvests throughout the year and pushing food prices even higher.
The International Monetary Fund (IMF) has downgraded its forecast for global growth to 3.1% in 2026, down from the 3.3% it predicted in January. This expected growth represents a slowdown from a 3.4% expansion anticipated for 2025. Recent U.S. and Israeli strikes on Iran, along with Tehran’s closure of the Strait of Hormuz and its retaliatory attacks on oil refineries and other energy infrastructure in neighbouring countries, have caused significant increases in oil and gas prices worldwide. Prior to the conflict, the global economy had displayed surprising resilience, bolstered by a tech boom characterised by massive investments in data centres and artificial intelligence, which, combined with rising productivity, had strengthened the world economy.