What Commodities Do Well During War? Geopolitical Investment Guide

War is humanity's most destructive activity, causing immeasurable suffering and loss of life. From an investment perspective, however, wars and geopolitical conflicts have historically created dramatic shifts in commodity markets as supply chains rupture, demand patterns change, and governments stockpile strategic materials. Understanding these patterns isn't about profiting from tragedy—it's about protecting wealth and positioning portfolios for realities that, unfortunately, recur throughout history.

This guide examines which commodities historically rise during wartime and geopolitical crises, backed by data from major conflicts of the past century. Whether facing regional conflicts, great power competition, or simply elevated geopolitical risk, understanding commodity market dynamics during warfare provides essential context for investors and policymakers alike.

Historical Context: How Wars Affect Commodity Markets

Before examining specific commodities, understanding the mechanisms through which warfare disrupts and reshapes commodity markets is essential.

Primary Drivers of Wartime Commodity Price Increases

• Supply disruptions: Wars physically destroy production facilities, block trade routes, and prevent exports from conflict zones
• Military consumption: Armed forces consume massive quantities of fuel, metals, and food
• Strategic stockpiling: Governments hoard critical materials for national security
• Safe-haven demand: Investors flee paper assets for physical commodities during uncertainty
• Sanctions and trade restrictions: Economic warfare removes suppliers from global markets
• Infrastructure damage: Pipelines, ports, refineries, and mines destroyed

Commodities That Rise During War: Historical Evidence

1. Crude Oil and Energy Products (The Essential War Commodity)

Oil is the lifeblood of modern warfare—tanks, aircraft, ships, and vehicles all require petroleum. Simultaneously, wars often disrupt oil production and transport, creating supply shortages that spike prices.

Historical Examples:

• 1973 Yom Kippur War: Arab oil embargo drove prices from $3 to $12 per barrel (+300%) in months
• 1990 Gulf War: Iraq invasion of Kuwait spiked oil from $15 to $40 (+167%) as 4 million barrels/day of production stopped
• 2003 Iraq War: Oil rose from $25 to $35 immediately (+40%), then to $147 by 2008 as Middle East instability persisted
• 2022 Ukraine War: Oil surged from $70 to $130 (+86%) as Russian supply faced sanctions

Why Oil Dominates Wartime Gains:

• Military consumption is massive: Modern militaries consume millions of barrels during conflicts
• Middle East concentration: 40% of global oil from geopolitically unstable region
• Chokepoint vulnerability: Strait of Hormuz, Bab el-Mandeb—single points of failure
• Inelastic demand: Economies can't quickly reduce oil consumption
• Strategic petroleum reserves: Governments stockpile, reducing available supply

How to Position:

• Crude oil ETFs (USO, BNO): Direct commodity exposure
• Energy stocks (XLE): Major oil companies with global operations
• Defense contractors (LMT, RTX): Benefit from increased military spending

2. Gold (The Ultimate Safe Haven)

Gold has served as the crisis hedge for thousands of years, and war is the ultimate crisis. When geopolitical risk rises, gold demand surges as investors seek assets independent of any government or financial system.

Historical Performance During Major Conflicts:

• World War II (1939-1945): Gold maintained value while currencies collapsed across Europe and Asia
• Korean War (1950-1953): Gold rose from $34 to $38 (+12%) despite fixed exchange rates
• Vietnam War escalation (1965-1975): Gold rose from $35 to $183 (+423%) as war spending fueled inflation
• Gulf War (1990-1991): Gold spiked from $380 to $425 (+12%) during crisis, then fell post-conflict
• Post-9/11 conflicts (2001-2011): Gold rose from $275 to $1,900 (+591%) during Afghanistan/Iraq wars
• Ukraine War (2022): Gold rose from $1,800 to $2,070 (+15%) in weeks

Why Gold Thrives During War:

• No counterparty risk: Unlike bonds or currencies, gold can't default or be devalued by government
• Universal acceptance: Recognized as value globally, regardless of political system
• Inflation hedge: War spending causes inflation; gold protects purchasing power
• Currency debasement protection: Wars financed by money printing devalue currencies
• Central bank demand: Countries increase gold reserves during geopolitical stress

Positioning Strategy:

• Maintain 10-20% gold allocation during elevated geopolitical risk
• Physical gold (coins, bars): 5-10% for ultimate safety
• Gold ETFs (GLD, IAU): 5-10% for easy trading
• Increase allocation when war risk rises measurably

3. Agricultural Commodities (Food Security Becomes Critical)

Wars disrupt agricultural production and exports, creating food shortages and price spikes. Wheat, corn, and soybeans become strategic commodities when breadbaskets become battlefields.

Historical Examples:

• World War I (1914-1918): Wheat prices tripled as European production collapsed
• World War II (1939-1945): Food rationing across Europe and Asia as farmland became battlefields
• Soviet Afghanistan War (1979-1989): Grain prices spiked as USSR faced sanctions
• Ukraine War (2022-present): Wheat rose 50%+, corn 40%+ as Ukraine (breadbasket of Europe) exports stopped

Why Food Commodities Rise During War:

• Production disruption: Farming impossible in combat zones
• Export blockades: Ports closed, shipping routes blocked
• Labor shortages: Farmers drafted into military service
• Fertilizer disruptions: Natural gas (key fertilizer input) in short supply
• Strategic stockpiling: Countries hoard food for security
• Inelastic demand: People must eat regardless of prices

Best Agricultural Investments During War:

• Wheat futures or ETFs (WEAT): Most critical food staple
• Corn ETFs (CORN): Feed grain for livestock
• Agricultural ETFs (DBA): Diversified food commodity exposure
• Farmland REITs: Own productive agricultural land

4. Industrial and Strategic Metals

Aluminum, copper, nickel, and other industrial metals become critical during wartime as military production ramps up and civilian supply chains break.

Aluminum (The Aircraft Metal):

• World War II: Aluminum production increased 10x for aircraft manufacturing
• Korean War: Aluminum prices doubled as fighter jet production surged
• 2022 Ukraine War: Aluminum rose 40% as Russian supply (major producer) faced sanctions

Nickel (Battery and Armor Metal):

• Essential for stainless steel and armor plating
• 2022: Nickel prices exploded 250% in days as Russian supply threatened
• Critical for EV batteries—strategic commodity for energy transition

Copper (The Economic Metal):

• Essential for ammunition, electrical systems, communications
• Supply disruptions in conflict zones spike prices
• Wartime infrastructure rebuilding drives long-term demand

5. Uranium and Nuclear Fuel

Wars and geopolitical stress highlight energy security, driving nuclear power investment and uranium demand.

• 2022-2024: Ukraine war drove European energy crisis, accelerating nuclear renaissance
• Uranium prices rose from $40 to $100+ per pound (+150%)
• Nuclear seen as energy independence solution during geopolitical stress

6. Natural Gas (Heating and Industrial Power)

Natural gas becomes weaponized during conflicts, especially in regions dependent on pipeline imports.

• 2022 Ukraine War: European natural gas prices rose 1,000%+ as Russian supply cut
• LNG (liquefied natural gas) becomes strategic commodity
• Countries without domestic supply face severe energy crisis

What NOT to Own During Wartime

Just as some commodities thrive, others suffer during conflicts:

Luxury Commodities

Coffee, cocoa, cotton, and other discretionary commodities often fall as consumption drops during wartime austerity.

Tourism-Related Commodities

Aviation fuel demand collapses as civilian air travel falls. Hotel and leisure consumption drops.

Long-Term Construction Commodities

Lumber and cement may initially fall as civilian construction stops, though may rise later for rebuilding.

Why This Matters for Investors

Understanding commodity behavior during war isn't about speculation or profiteering from human suffering—it's about prudent risk management and portfolio protection during dangerous times. Here's why this knowledge matters:

• Geopolitical Risk is Rising: Great power competition between US, China, and Russia is intensifying. Regional conflicts proliferate. The probability of major conflicts over the next decade is higher than any time since the Cold War. Portfolios optimized for peace will suffer massive losses if conflict erupts.
• Commodity Gains Offset Stock Losses: Wars typically crash stock markets (uncertainty, earnings collapse) while spiking commodity prices. A portfolio with 20-30% commodities (oil, gold, agriculture) can break even or profit during conflicts while all-stock portfolios lose 30-50%. This is essential portfolio insurance.
• Energy Security Equals National Security: Countries without energy independence face catastrophic economic damage during supply disruptions. Investors positioned in energy commodities benefit from this strategic reality as governments prioritize energy security over cost.
• Food Security is Life or Death: Nations will pay any price for food during shortages. Agricultural commodity investors benefit from this inelastic demand— people must eat, regardless of wheat price. During Ukraine war, wheat at $14/bushel seemed expensive until it hit $14 and kept climbing to $12-14 sustainably.
• Gold Preserves Wealth Across Regime Change: Wars can destroy currencies, topple governments, and eliminate financial systems. Gold survives all of it. For anyone living through regional instability or concerned about systemic risk, 10-20% gold allocation isn't speculation—it's survival insurance.

In practical terms, consider two portfolios during Ukraine war (2022): Portfolio A is 100% stocks, loses 20% as market crashes. Portfolio B is 70% stocks, 15% commodities (oil, gold), 15% cash—loses only 5% as commodity gains offset stock losses. Over subsequent years, Portfolio B recovers faster and builds more wealth. This pattern repeats in every geopolitical crisis.

Implementing a Geopolitical Risk Strategy

Understanding war-sensitive commodities is valuable; positioning appropriately is essential.

Risk Assessment Framework

Low Geopolitical Risk (Peacetime):

• 10-15% commodities: 10% gold, 5% energy/agriculture
• Purpose: Baseline diversification

Moderate Risk (Regional Tensions):

• 20-25% commodities: 15% gold, 5% energy, 5% agriculture
• Purpose: Active protection against escalation

High Risk (Active Conflicts, Great Power Competition):

• 30-40% commodities: 20% gold, 10% energy, 5% agriculture, 5% strategic metals
• Purpose: Maximum geopolitical protection

Practical Portfolio Example (High Geopolitical Risk Environment)

• 35% Commodities:
  • 15% Gold (10% ETFs, 5% physical)
  • 10% Energy (7% oil stocks/ETFs, 3% natural gas)
  • 5% Agriculture (wheat, corn, soybeans via DBA)
  • 5% Strategic metals (aluminum, uranium miners)
• 40% Stocks (defense contractors, energy companies, food producers)
• 15% Bonds (short-duration, high-quality)
• 10% Cash (for opportunities during volatility)

Ethical Considerations

It's important to acknowledge that investing in war-sensitive commodities raises ethical questions. Some considerations:

• Hedging vs. Speculation: Owning gold and energy for portfolio protection differs from speculating on conflict escalation
• Avoid weapons manufacturers: If uncomfortable with defense contractors, focus on commodities themselves
• Diversification rationale: Commodity allocations serve portfolio balance, not profit from tragedy
• Consider ESG alternatives: Some investors exclude fossil fuels and defense entirely

Key Takeaways

• Crude oil is the essential war commodity, rising 50-300% during major conflicts due to military demand and supply disruptions
• Gold surges 15-40% during geopolitical crises as the ultimate safe haven with no counterparty risk
• Agricultural commodities spike during conflicts when food production and exports disrupted
• Strategic metals (aluminum, nickel, uranium) benefit from military production and energy security focus
• Natural gas becomes weaponized in regional conflicts, spiking 100-1000% when supply cut
• Luxury and discretionary commodities fall as consumption drops during wartime austerity
• Commodity allocations offset stock losses during conflicts, providing essential portfolio protection
• Scale allocations to geopolitical risk level: 10-15% peacetime, 30-40% high-risk periods
• Physical gold provides ultimate security independent of financial system functionality
• Geopolitical risk is rising—great power competition makes conflict probability higher than any time since Cold War

Conclusion

War is tragedy first and foremost—the human cost immeasurable and the suffering profound. Yet economic and investment realities during conflict cannot be ignored. Throughout history, wars have disrupted supply chains, destroyed production capacity, and reshaped global trade— with profound impacts on commodity markets.

Those who understand these patterns aren't celebrating conflict—they're acknowledging reality and protecting their families' financial security during dangerous times. When oil supplies are disrupted, when food exports stop, when safe havens become essential, commodity markets react predictably and dramatically.

The historical evidence is clear: energy and precious metals surge during major conflicts; food commodities spike when breadbaskets become battlefields; strategic metals benefit from military production. Portfolios positioned accordingly preserve wealth while others suffer devastating losses from the dual impact of crashing stocks and disrupted supply chains.

With geopolitical tensions rising—US-China competition, Russian assertiveness, Middle East instability, nuclear proliferation—the probability of significant conflicts over the coming decade is elevated. Preparing portfolios for this reality isn't pessimism or warmongering— it's prudent risk management based on historical patterns and current developments.

Remember: Hope for peace, but prepare for conflict. Those who acknowledge risk and position accordingly protect their wealth; those who assume perpetual peace often lose everything when reality intrudes.