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Blog

Conflicts and the Effects on Commodities

February 19, 2024
Author
Hadeer ElMalah

A Madman's World

For decades, the world has been proving over and over that it’s a volatile and increasingly dangerous place. Geopolitical conflicts trigger a chain reaction on commodities that is almost universal in nature and can be ever-lasting.

In other words, no matter how far away and safe you think you are, you’re on the receiving end of global conflicts in one way or another.

How the Russian-Ukraine war is still affecting you today is a live example; another is how the most recent Israeli-Palestinian war is.

The Israeli-Palestinian war

The current tragic Israeli-Palestinian war in the Middle East, which is responsible for a rough third of the world’s crude supply, has triggered massive repercussions in energy prices. We’ve seen immediate spikes in the prices of oil and gold that look like they’re going to be long-lasting. Four months after the war started, oil prices continued to rise after Israel rejected Hamas’s ceasefire demands.

Even with oil shipments remaining broadly stable, the war’s escalation into the Red Sea is enough to ignite buyers’ worries. Brent Crude and West Texas Intermediate, amongst other suppliers, are trading at higher prices: 1.36 percent and 1.29 percent higher, respectively. With the fears of Iran getting involved, the supplier of a rough 5% of oil, the current oil market, and other safe haven commodities continue their price surge.

Record-high Real Estate Revenue

The Russian-Ukrainian war instantly caused a macroeconomic shift on a global scale. In 2022 alone, the dramatic price changes in critical foods and fuel commodities caused 135 countries to suffer direct losses between 0 and a staggering 10% of GDP.

On the other hand, there were unpreceded gains in some markets. Georgia, Russia’s neighboring country, has been home to many Russians fleeing their government, as well as Ukrainians fleeing the war.

Accordingly, the industry revenue of Real estate, rental, and leasing in Georgia has been continuously rising in unprecedented ways in 2022 due to the Russian-Ukraine war and is soaring to a record high revenue of $29.78bn in 2024.

It doesn’t look like the market’s revenue will be that much different anytime soon, either.

The Necessity of Diversification

Investors diversifying their investment portfolio is not a new practice; it’s a healthy adaptive practice to ensure your assets are protected and growing in a world full of turmoil.

The safe haven commodities, most popularly gold, are the choice of most investors who like to take low-risk moves because it’s guaranteed that these commodities will rise in times of chaos.

But here’s the thing: they are safe for a reason: they do not provide high yields or revenues. Nevertheless, they are still essential assets to secure in a diversified portfolio.

Other investments, namely international real estate, agricultural lands, or other investment opportunities in emerging markets have high yields and ROIs that cannot be gained in more mature markets.

With guaranteed relatively higher yields and ROIs, these opportunities will not be cheap forever. What’s also guaranteed is the prolonged succession of conflict and turmoil. The best time to take action is now.

The One-Strategy-Fits-All Fallacy

There is no one-strategy-fits-all for diversifying your investment portfolio. There has to be a tailored strategy with concrete steps that are taken to shield yourself and your family from the guaranteed madness of the world.

We have served 200+ entrepreneurs to diversify their investment portfolio in international markets. Our team of experts does the heavy lifting and implores the most lucrative international investment partnerships and real estate opportunities so you can focus on what matters: your business.

Reach out; we’re happy to serve you next.