⚠️ 2025–2026: Two Active Conflicts
The Russia-Ukraine war - now in its fourth year - continues to distort global energy and grain markets. The Middle East conflict that began February 28, 2026 has added fresh pressure on oil and gold through Strait of Hormuz risk. Track the real-time price impact of both conflicts on our War Impact page.
The Three Mechanisms
Wars affect commodity markets through three distinct channels:
- 1. Supply disruption: Wars physically destroy infrastructure, block trade routes, or trigger sanctions that remove supply from the market. Russia's oil and gas being cut off from European buyers in 2022 is the starkest recent example.
- 2. Safe-haven flows: Investors move money out of equities and into gold, silver, and other perceived safe stores of value during geopolitical uncertainty. This demand is independent of gold's physical supply and demand fundamentals.
- 3. The war premium: Even without actual supply disruption, the risk of it happening adds a premium to prices. Oil markets assign a probability-weighted cost to potential disruption scenarios and embed this in the current price.
Russia-Ukraine: The Multi-Commodity Shock
Russia's full-scale invasion of Ukraine on February 24, 2022 was the most severe commodity supply shock since the 1973 oil embargo. Russia is a top-three global producer of oil, natural gas, wheat, fertilisers, nickel, palladium, and aluminium. Ukraine is a major wheat, corn, and sunflower oil exporter.
The simultaneous disruption across energy, metals, and food markets drove a global inflation surge. European natural gas prices reached 15× their pre-war levels at peak. Wheat nearly doubled. Brent crude crossed $120/bbl. Nickel briefly hit $100,000/tonne on the LME, triggering a suspension of trading.
Middle East (February 2026): The Oil Chokepoint Risk
The escalation of Middle East hostilities beginning February 28, 2026 introduced a different risk: not direct supply disruption, but threat to the world's most critical oil transit route. The Strait of Hormuz - a 21-mile-wide waterway between Iran and Oman - carries approximately 20 million barrels per day, or roughly 20% of global supply.
Even a partial closure would immediately affect global oil prices. The conflict has also driven gold sharply higher through safe-haven demand, with investors pricing in escalation risk that extends well beyond the immediate geography.
Historical Patterns
The relationship between wars and commodity prices has deep historical precedent:
- • 1973 Arab-Israeli War: OPEC oil embargo → oil price quadrupled, triggering global stagflation
- • 1990 Gulf War: Iraq's invasion of Kuwait → oil spiked to $40 (equivalent to ~$90 today)
- • 2003 Iraq War: Oil +30% on supply concerns, gold rallied
- • 2022 Ukraine invasion: Multi-commodity shock across energy, metals, and grains
- • 2026 Middle East: Oil war premium, gold to all-time highs
Track the impact of both active conflicts with live data
Frequently Asked Questions
Why do oil prices rise when there is a war in the Middle East?
The Middle East produces approximately 33% of global oil and is home to the Strait of Hormuz, through which roughly 20% of the world's daily oil supply passes. Any conflict threatening this chokepoint adds a 'war premium' to prices - even before any supply is actually disrupted. Markets price in the risk of disruption, not just the reality.
How did Russia's invasion of Ukraine affect commodity prices?
The February 2022 invasion disrupted supply across multiple commodity markets simultaneously. Russia is a major oil and gas exporter - sanctions and shipping restrictions removed it from accessible European energy markets. Russia and Ukraine together export roughly 30% of global wheat - the conflict disrupted Black Sea grain corridors. The combined shock drove Brent crude above $120/bbl, natural gas to record highs in Europe, and wheat futures to near-double.
What happened to wheat prices after the Ukraine war started?
Wheat futures nearly doubled within weeks of the February 2022 invasion, from around $7/bushel to nearly $13/bushel by May 2022. Ukraine's Black Sea ports were blocked, halting grain exports. Russia's exports faced sanctions and shipping restrictions. Though prices gradually fell as alternative supply routes were established (including a UN-brokered grain corridor), wheat remained 30–50% above pre-war levels for over a year.
Does gold always go up during wars?
Gold almost always rises during geopolitical crises, but the magnitude depends on the scale and duration. Brief conflicts may cause short-lived spikes. Prolonged wars with major-power involvement - like Russia-Ukraine and the 2026 Middle East escalation - sustain gold's safe-haven premium for months or years. Gold's response is strongest when the conflict threatens financial system stability or involves nuclear powers.
What is the 'war premium' in oil prices?
The war premium is the extra price embedded in oil above what supply-demand fundamentals alone would justify. It reflects the market's assessment of the probability and severity of supply disruption. During the 2022 Russia-Ukraine war, analysts estimated the war premium at $10–$20/bbl. During the 2026 Middle East escalation, the premium has varied based on proximity to Strait of Hormuz transit risks.
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