How Will The Iran Conflict Impact Commodities

UBS views commodities as an effective portfolio diversifier during periods of geopolitical tension and energy supply shocks. Despite potential volatility from the US-Iran conflict, fundamental support remains for industrial metals and gold.

Key Takeaways

• 1.Commodities act as a useful portfolio diversifier to hedge against inflation and energy supply shocks amid geopolitical uncertainty.
• 2.While the US-Iran deal to reopen the Strait of Hormuz may reduce geopolitical risk premiums, fundamentals for commodities like copper and aluminum remain supportive.

Table of Contents

• Key message
• 01 Volatility in commodities could remain elevated as the details of the US-Iran deal become clearer.
• 02 The geopolitical risk premium should fade, but fundamentals look supportive.
• 03 We continue to favor commodities, with a focus on active management.
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