Global competition for energy, metals and agricultural resources is reshaping commodity markets as geopolitical conflicts, supply shortages and rising demand threaten to make access to raw materials as important as capital, according to a new report by global investment firm Ninety One.
There has been a shift from the China-led commodity super cycle of the 2000s, as today’s market is being shaped more by constrained supply, geopolitical fragmentation and regional resource security rather than by demand growth.
Global physical resources are being drained by conflicts disrupting energy supplies, artificial intelligence demanding more electrification and higher demand for food security globally amid fertilizer constraints, the report said.
“This is the revenge of the old economy. This is not simply another commodity supercycle. Demand is solid, but the real story is supply,” Ninety One’s head of natural resources, Paul Gooden, said. “Producers have spent the past decade prioritising cash flow over growth, and that discipline is now colliding with geopolitical fragmentation and new sources of demand.”
Years of constrained investment and increasingly fragmented supply chains could make these pressures difficult to reverse.
AI and energy
The expansion of AI and data centres is creating a new source of electricity demand, placing additional strain on power grids already struggling to accommodate electrification.
Proposed US data-centre projects represent approximately 200 gigawatts of electricity demand, equivalent to roughly 200 times the power consumption of the city of San Francisco, according to the report.
“The race to build AI infrastructure is also becoming a race to secure energy. Without the power to run them, even the most advanced data centres are just expensive buildings,” Gooden said.
With constrained grid capacity, companies are exploring direct power generation, creating new opportunities for natural gas.
As oil struggles with the conflict in the Middle East and the closure of the Strait of Hormuz, energy supply is not guaranteed when it’s needed the most.
Global oil inventories have fallen by approximately one billion barrels since the beginning of the conflict, making fuel more expensive.
The US Gulf Coast three-to-one refining crack has risen to approximately $45 a barrel, when the typical price was around $20, while tanker costs between the Middle East and Asia have climbed to $30 a barrel from $2 to $3.
“Even if the conflict ended tomorrow, rebuilding a billion barrels of inventories would create additional demand for years,” Gooden said. “The market is underestimating how long it could take to return to normal and supply has not normalised yet.”
Metal rush
The race for electricity and infrastructure is also impacting metals and reshaping the market, but record prices are masking increasingly divergent conditions.
Copper inventories have risen sharply as material is redirected into the US amid tariff uncertainty, while Chilean production has fallen to its lowest level in six years.
“The long-term fundamentals for copper remain compelling, driven by electrification and a growing demand for infrastructure. But investors shouldn’t confuse a strong long-term investment case with a straightforward market today,” Ninety One’s natural resources portfolio manager, George Cheveley, said. “In the short term, at these prices, copper looks increasingly risky.”
Gold is benefiting from central banks purchasing more of the precious metal and diversifying their reserves and its locations amid geopolitical tension. At the same time, miners’ equity valuations have yet to fully reflect stronger profitability of the non-yelding metal.
“Central banks are continuing to buy gold even at historically elevated prices, suggesting this is a structural shift rather than a short-term reaction to geopolitical uncertainty,” Cheveley said.
Food security
Supply pressures are extending into agriculture, where higher energy costs, concentrated fertiliser production, extreme weather and tightening inventories could create further challenges for global food supplies heading into 2027, the report suggests.
The Middle East is a major supplier of nitrogen fertilizer, while global potash production remains concentrated in a handful of countries as others try to develop domestic production.
“The risk is that these pressures arrive together. Higher diesel and fertiliser costs are already squeezing farmers, and a prolonged El Niño could put further pressure on yields,” Ninety One’s natural resources portfolio manager, Dawid Heyl said.
The report warns that agricultural production in 2027 could face further strain if fertilizer availability tightens and costs remain elevated. Combined with weather-related disruptions, those conditions could mark a turning point in the agricultural cycle.
The road ahead
The report suggests that a fundamental shift in the value of energy, metals and agricultural resources is happening, and these pressures are just accelerating it.
“Years of underinvestment mean supply cannot simply respond overnight and the ability to pay for resources will become increasingly important,” Gooden said. “The next investment cycle may be defined as much by what the world struggles to produce as by what it wants to consume.”
Source: https://www.mining.com/global-resource-squeeze-signals-market-shift-report/
