Geopolitical Tensions Are Reshaping Global Commodity Markets

A new era of geopolitical risk is playing out across multiple fronts, with ongoing conflicts and strategic rivalries exerting significant influence on global commodities, energy markets and critical supply chains. Investors and analysts increasingly see geopolitical risk premiums embedded in commodity prices, not just as short-term reactions but as persistent structural drivers affecting gold, oil, copper, lithium and other essential materials.

Venezuela’s Crisis: U.S. Control, Market Impact and Heavy Tensions

The situation in Venezuela has escalated sharply in early 2026, with U.S. forces reportedly capturing President Nicolás Maduro and asserting control over Venezuelan oil production and exports. The White House has signaled indefinite control of Venezuelan crude flows, intending to direct oil to U.S. refineries and boost domestic energy security.

Venezuela holds some of the world’s largest proven oil reserves and disruption of exports or changes in market access could materially affect oil pricing and trade patterns. China, heavily reliant on discounted Venezuelan and Iranian oil, has expressed strong criticism of U.S. actions and is evaluating how to maintain energy supplies amid shifting geopolitical currents.

Commodity markets are already pricing this heightened uncertainty. Oil prices have reacted with increased volatility, reflecting supply risk premiums even as global oversupply concerns remain in certain quarters.

Russia-Ukraine Conflict and its Lingering Impact on Energy and Raw Materials

The Russia-Ukraine war continues to cast a long shadow over global commodity markets. Sanctions on Russian energy exports, repeated attacks on Russian hydrocarbon infrastructure and related maritime incidents have reduced available export volumes and added supply risk to global oil and gas markets.

The conflict also has broader implications for metals and industrial commodities. Russia is a major supplier of palladium, nickel and other inputs critical to manufacturing and clean energy technologies. Disruptions and sanctions have constrained trade and forced alternative supply chain arrangements.

China’s Strategic Position and Global Mineral Dynamics

Beyond bilateral flashpoints, China’s geopolitical posture remains central to commodity markets. Its dominance in refining and processing of key raw materials, including critical minerals essential for batteries and advanced technologies, gives it leverage that can influence pricing and supply chain security. Export controls and trade restrictions on materials such as gallium, germanium and rare earth elements have underscored the vulnerability of global manufacturing chains.

This dynamic is particularly significant for minerals such as copper and lithium, the backbone of electrification, electric vehicles and renewable energy systems. Disruptions to these supply chains, whether from geopolitical friction, trade restrictions, or regional instability, can trigger broad price movements well beyond the commodities themselves.

Gold is a Safe Haven and Risk Premium Indicator

Gold has responded to the broader risk environment as a traditional safe-haven asset. With geopolitical uncertainty increasing across multiple regions, from Venezuela and Russia to persistent tensions involving China and U.S. policy, investors are placing a growing risk premium on gold, often ahead of more cyclical assets.

This trend reflects a long-standing correlation: when geopolitical tensions rise, safe-haven demand for gold surges as investors seek protection against volatility, inflationary pressures and breakdowns in trade or financial flows.

Where Supply Risk Meets Structural Demand

Oil markets remain profoundly sensitive to geopolitical developments. Venezuela’s political turmoil, combined with Russia’s constrained export capacity and Middle East tensions, underscores how fragile global supply can be. Even as OPEC+ contemplates production adjustments, geopolitical risk continues to support a structural premium in crude pricing.

The realities of energy market geopolitics are well documented: geopolitical shocks have historically affected oil prices by creating negative supply shocks or raising uncertainty, which feeds into inflation and economic optimism.

Copper, Lithium and Critical Minerals, The Geopolitics of Transition Metals

Industrial metals like copper have experienced notable strength. Record highs in copper reflect not only fundamental demand tied to electrification and infrastructure, but also supply chain risk premiums from geopolitical instability and concentrated supply regions.

Lithium and other critical minerals are similarly affected, with concentrated global production and ongoing geopolitical friction prompting nations to reassess domestic extraction and stockpiling strategies. These minerals are indispensable to electric vehicle batteries, grid storage and renewable energy technologies, making them both strategic and economically vital.

Impacts on Canada and Global Supply Chains

For commodity-rich economies such as Canada, geopolitical tensions offer both risk and opportunity. Canada’s energy exports, particularly oil sands crude and LNG, are deeply integrated into North American and global markets. Price volatility driven by geopolitical risk may benefit Canadian producers via higher realized prices, but it also exposes export infrastructure to risk of demand shifts if global buyers diversify away from volatile suppliers.

Likewise, Canada’s prominent role in metals production,  particularly copper and emerging battery minerals, situates it to benefit from global efforts to secure supply chains outside of geopolitically sensitive regions. However, the competitive landscape increasingly includes Chinese and Latin American producers, making forward strategies around critical mineral processing and domestic value-add capabilities a priority.

A Geopolitical Risk Premium Built Into Markets

What is striking about the current environment is the transition from episodic geopolitical shocks to a persistent risk premium embedded in commodity pricing and capital allocation. Conflicts in Ukraine, maritime tensions, China’s strategic positioning, and evolving U.S. policy toward Venezuela are collectively reshaping how markets assess risk and long-term supply stability, across energy, precious metals and industrial-base materials.

Markets are no longer simply reacting to events after the fact; they are pricing in sustained geopolitical uncertainty as a structural factor. That shift reflects broader economic recalibration in which commodity markets are increasingly integrated with geopolitics, national security considerations and supply chain resilience, a dynamic likely to shape investment strategies and pricing benchmarks for years to come.