Resources and Diplomacy
Commodity supply imperatives in a decoupling world economy
War over Iran
The major attacks by the US and Israel on Iran which began on February 28th, and the latter's retaliation has had a record-breaking impact on energy markets, but has particularly affected oil-dependent economies in Asia. Despite its establishment of air superiority at an early stage, the US-Israel coalition was unable to eliminate regular missile and drone responses, while Iran's stranglehold on the Straits of Hormuz increasingly raises the stakes for the stability of the world economy due to the waterway's key role in global oil and gas supply. With the prospect of a lengthy conflict increasing, those oil and gas importers without realistic alternative sources of supply appear increasingly vulnerable.
Ukraine Conflict continues in the background as Oil Sanctions are eased
Western sanctions on Russia's exports of oil were eased in part to offset the near total cut-off of oil leaving the persian Gulf. Russia stands to benefit enormously, as sanctions had been having a major impact on its economy after 4 years of war.
In the wake of its hostilities with in Ukraine, in combination with the collateral disruption to supplies of energy and curtailment of grain exports from both countries, the Russian invasion initially caused intense commodity market turbulence for several months in late 2022-early 2023. However, over time, as to a large extent prices settled down as new buyers were found for embargoed commodities and new sources of supply emerged for sanctioned exports.
The Critical Minerals Security Pact struck between US President Trump and Ukraine's President Zelenskiy in 2025, if implemented, signals a new paradigm for global commodities trading. The soft border that still exists, no matter how frayed, between geopolitics and finance may still give way to a solution where commerce becomes paramount even at the cost of hard fought military and political objectives.
Beyond Ukraine, from the closing months of last year to the present day, almost anywhere on the global map may become subject to threats of invasion whether from superpowers-regional powers with their local strategic ambitions. With US-China trade relations taking a turn for the worse and tariff threats being tossed around by the US with regularity, access to critical minerals whose supply is dominated by Beijing and its state-backed enterprises in recent months has been moving to centre stage. The EV industry and battery technology depend on several key elements including lithium, cobalt, graphite and phosphorous as well as copper, nickel and manganese.
