By the morning of February 28, 2026, US and Israeli forces launched coordinated strikes on Iran. By the end of March, Brent Crude had risen 65%, marking the largest monthly increase in oil market history (World Bank, 2026), and the Strait of Hormuz, through which roughly 20 percent of global oil passes, was effectively closed. The S&P 500 fell 9% below its January peak. The MSCI EAFE index of developed international markets dropped between 8% and 12% (U.S. Bank, 2026) before partially recovering after a ceasefire announcement. The International Energy Agency described what followed as the largest supply disruption in the history of the global oil market (Brookings, 2026).

This is what geopolitics looks like when it moves markets. The mechanism runs through specific prices, chokepoints and decisions made in government offices that then show up as numbers on a trading screen.

Energy as a Weapon

Energy is consistently the first market to register geopolitical stress, because supply is physically concentrated and infrastructure is hard to replace. The Strait of Hormuz is 21 miles wide at its narrowest point and has no meaningful seaborne alternative. When Iran closed it in March 2026, roughly 20% of global oil supply and around a fifth of global LNG were interrupted simultaneously. QatarEnergy, the world’s largest LNG producer, declared force majeure on its contracts. European gas prices rose 54% – 63% in a single week (Congressional Research Service, 2026), and parts of QatarEnergy’s Ras Laffan facility sustained missile damage that the company warned could take up to five years to repair (S&P Global, 2026).

Higher energy prices don’t stay in the energy sector. They raise input costs across manufacturing, push up fertiliser and food prices, and force central banks to reassess rate paths. The shock functions like a large, sudden tax on income for fuel importing economies; it raised production costs in Asia’s manufacturing base, widened balance of payment gaps in emerging markets, and revived the 2021-2022 gas crisis across parts of Europe (IMF, 2026).

Trade Policy: The Chip War Arrives

Beyond active conflict, trade policy is now a standing source of market uncertainty. Tariffs have become routine tools of geostrategy. By April 2025, the effective US tariff rate on Chinese goods had reached 145 percent at its peak before partial rollbacks, and a separate Section 122 order signed in February 2026 applied a 10% baseline rate to roughly $1.2 trillion in US imports (Tax Foundation, 2026).

The semiconductor sector shows how this reaches investor portfolios. NVIDIA once held over 90% of China’s AI chip market. By early 2026, that share had fallen to approximately 50% due to tariffs, Beijing’s domestic substitution mandates, and US export controls (Oplexa, 2026). China controls over 80% of global rare earth refining capacity and has used that position actively, imposing export controls on gallium, germanium, and antimony before suspending them under a one year framework agreed to in late 2025 (Sourceability, 2025). Both sides understand that the freeze expires this year.

For investors in anything that depends on chips, which now just means most of the economy, supply chain geography is a financial risk.

When capital flows, who gets left behind?

When geopolitical risk spikes, capital moves. Gold was up 6% year-to-date as of January 2026, even AFTER gold backed ETFs had returned approximately 70% over the prior twelve months (Aspiriant, 2026). The US dollar, Swiss franc, and yen absorbed safe haven flows throughout the Strait of Hormuz crisis. Emerging market currencies in Asia and Africa bore the inverse pressure; they were paying more for energy imports in dollars, their own currencies were losing value and most of their governments had little room to absorb the extra cost.

The currency matters a lot. A portfolio of Southeast Asian equities might perform well in local terms while delivering poor results in dollar terms if the underlying currency has moved 8 to 12 percent against the US dollar. This shows that currency exposure often determines results.

If you wait for calm, you’ll be waiting forever.

Not every geopolitical event reshapes markets. A useful framework separates sentiment driven volatility from actual economic disruption (Russell Investments, 2026). When US forces captured Venezuela’s president in January 2026, analysis suggested that asset prices would be largely unaffected, and that proved correct. BlackRock’s geopolitical risk dashboard placed the current environment in the 90th percentile of historical readings as of May 2026 (BlackRock, 2026). That does not mean that every headline warrants a portfolio decision.

What it does mean is that structural positions carry embedded risk that simply wasn’t there a decade ago: concentrated exposure to energy chokepoints, single region semiconductor supply chains, or currencies tied to oil importing economies under fiscal strain.

Wellington Management’s 2026 outlook put it plainly; the relationship between geopolitics and commerce is being rewritten, and it is unlikely to revert (Wellington Management, 2026). The investors best positioned for that are the ones who stopped waiting for things to normalise.

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