When conflict disrupts trade routes, commodities find new ones

<div class="grid grid--33-66-col"><div class="col"><img loading="lazy" src="/getContentAsset/061c994a-a452-418f-bfa0-f2cf3cf5c577/cb87803a-320c-480f-ab75-7b9029eaaf79/Ahmad-Al-Sati-new.png?language=en" alt="Ahmad Al Sati - insights" title="Ahmad Al Sati - insights" style="width: 180px" class="fr-fic fr-dii"></div><span style="font-size: 12px"><div class="col"><strong>AHMAD AL-SATI</strong><br><br>PRESIDENT OF GEMCORP CAPITAL ADVISORS LLC, PORTFOLIO MANAGER<br><br>Ahmad Al-Sati is Portfolio Manager of the Gemcorp Commodities Alternative Products strategy (GCAP) and President of Gemcorp Capital Advisors LLC, based in New York. He is responsible for leading Gemcorp’s commodities-focused investment strategy and overseeing the firm’s US advisory platform.</div></span></div><hr><p><em>Escalating conflict in the Middle East has rattled commodity markets and global supply chains. But as Ahmad Al-Sati explains, the flow of essential goods adapts rather than stops, a distinction that matters greatly for trade finance investors.</em></p><p>In March 2021, just as the world was starting to re-emerge from a global pandemic, the Ever Given, a single container ship, ran aground in the Suez Canal, effectively shutting off 12 per cent of global cargo and 30 per cent of all container traffic. The incident held up an estimated $9 billion of goods per day and left more than 430 ships queued on either side.¹ The canal was closed for six days, after which the world returned to taking marine cargoes for granted.</p><p>Today, the world is again rediscovering that chokepoints matter. The Strait of Hormuz is now effectively closed with limited commercial marine traffic going through it and more than 170 vessels trapped inside.²</p><p><strong>Figure 1: Volume of crude oil and petroleum liquids transported through world chokepoints (million barrels per day)</strong></p><p><img loading="lazy" src="/getContentAsset/6d8e37c1-32fb-4352-86cb-f577dc9c04ca/cb87803a-320c-480f-ab75-7b9029eaaf79/volume-of-crude-oild-and-petroleum.png?language=en" alt="When conflict disrupts trade routes, Figure 1" title="When conflict disrupts trade routes, Figure 1" style="width: 100%" class="fr-fic fr-dib"></p><p><span style="font-size: 12px">Source: US Energy Information Administration, World Oil Transit Chokepoints, data as of H1 2025. </span></p><p>Around 20 per cent of the world’s oil and liquefied natural gas (LNG) passes through the Strait of Hormuz.³ The strait is also a gateway to other essential commodities and materials. Gulf countries spent decades oil-proofing their economies by investing in other commodities and downstream operations. As a result, they now account for 20 per cent of global fertilizer exports (needed for global food security), a significant share of certain petrochemicals (essential for industrial production) and nine per cent of global aluminium production.</p><p>Unlike oil and gas, these products can’t be piped out. As a result, a variety of commodity prices have risen,⁴ with oil taking the marquee spot as it surged more than 25 per cent in a week, the largest weekly gain on record.⁵</p><p>Markets reacted as markets do – sharply – with liberal use of the word “unprecedented” to describe events. But the shock, while significant, follows an established pattern repeated throughout the history of trade. Major disruptions at critical chokepoints cause sharp, concentrated pain. And then trade ultimately finds another way.</p><p><strong>Figure 2: Oil price reaction to geopolitical shocks (WTI, $ per barrel)</strong></p><p><img loading="lazy" src="/getContentAsset/827528e4-64a9-489e-9d87-7ad1d012ac22/cb87803a-320c-480f-ab75-7b9029eaaf79/Oil-price-reaction-to-geopolitical-shocks.png?language=en" alt="When conflict disrupts trade routes, Figure 2" title="When conflict disrupts trade routes, Figure 2" style="width: 100%" class="fr-fic fr-dib"></p><p><span style="font-size: 12px">Source: U.S. Energy Information Administration, WTI spot price, as of March 09, 2026</span></p><h2 style="font-size: 2rem">A pattern that keeps repeating</h2><p>The closure of the Hormuz Strait is not the first major trade disruption this decade.&nbsp;</p><p>COVID came first, albeit with an important distinction. Global merchandise trade fell 5.3 per cent in 2020 as borders closed and factories shut down. It was a serious contraction, although far smaller than many feared,⁶ but the aggregate figure obscured divergence between products. Trade in agricultural goods actually increased, even under the strictest lockdown conditions, while fuels and mining products dropped 25 per cent as travel collapsed and work shut down.⁷ The goods the world genuinely could not do without kept moving. The goods it could temporarily forgo did not.</p><p><strong>Figure 3: Merchandise exports by product group (US dollars, millions)</strong></p><p><strong><img loading="lazy" src="/getContentAsset/4d3f2be3-3fe9-4bea-8d41-47350c3adcc4/cb87803a-320c-480f-ab75-7b9029eaaf79/Merchandise-exports-by-product-group.png?language=en" alt="When conflict disrupts trade routes, Figure 3" title="When conflict disrupts trade routes, Figure 3" style="width: 100%" class="fr-fic fr-dib"></strong></p><p><span style="font-size: 12px">Source: World Trade Organisation, Statistics Database, March 2026.&nbsp;</span></p><p>After Russia’s invasion of Ukraine in 2022, Europe cut Russian gas imports, causing havoc across the commodity complex. Yet global energy markets rebalanced within months as LNG shipments increased and alternative supply routes opened up. Sanctions on Russian oil did not remove those barrels from global markets either – they redirected them toward Asia and other buyers.⁸ Other commodities required more drastic solutions. The US, for example, had to exempt Russian fertilisers from sanctions to meet demand from American farmers.</p><p>A third trade shock played out in the Red Sea in late 2023, when Houthi attacks saw container tonnage through the Suez Canal collapse by over 80 per cent,⁹ causing Asia-Europe freight costs to rise nearly fivefold.¹⁰</p><p>In each case, trade resilience was driven by the laws of the physical world. You cannot relocate a copper mine or a banana plantation. Commodity production is fixed by geology, climate and geography in ways that no geopolitical shock can override. When disruption strikes, production does not move; instead, prices, logistics and trade channels adjust and adapt.</p><h2 style="font-size: 2rem"><strong>Three channels, one argument</strong></h2><p>The latest conflict in the Gulf is affecting commodity markets across three channels simultaneously. Understanding these disruptions matters for investors.</p><p><span style="color: rgba(101, 13, 27, 1)"><strong>1.</strong></span><strong>&nbsp;&nbsp;</strong>With the Strait of Hormuz effectively closed, vessels are having to reroute. According to analysis by global trade consultancy Kpler, the situation in the Gulf is forcing the world’s largest carriers to change service rotations, not call at certain ports or divert to alternative hubs, either within the Arabian Peninsula, Indian Ocean region or completely outside the region.¹¹</p><p><span style="color: rgba(101, 13, 27, 1)"><strong>2.&nbsp;</strong></span>The second is a surge in demand for working capital. Longer routes mean longer working capital cycles, and higher commodity prices mean the gross value of each shipment increases alongside the capital needed to fund it. Shipping and storage costs may also rise.&nbsp;</p><p>The global trade finance gap already stood at $2.5 trillion before this conflict began, according to the Asian Development Bank. The gap has risen 47 per cent since 2020, driven by a combination of geopolitical volatility, sanctions and the withdrawal of bank capital from the sector.¹² That gap seems sure to widen further in light of recent events as supply chains reorganise and counterparties seek new financing relationships at speed.</p><p>Private lenders could have a key role to play in bridging the gap. Unlike many forms of credit, commodity trade finance is typically short-dated and self-liquidating – secured against specific cargoes and repaid once goods are delivered and sold. That structural flexibility is particularly valuable now: if supply from one region is cut off, financing can shift quickly to producers elsewhere, because capital moves faster than physical assets.&nbsp;</p><p><span style="color: rgba(101, 13, 27, 1)"><strong>3.&nbsp;</strong></span>The third channel is collateral appreciation, which receives little attention in news reports but arguably matters more to investors. When commodity prices rise, the value of the assets backing trade loans rises too. A fuel trader with storage capacity outside the disrupted corridor – able to sell while competitors cannot ship – may see the loan-to-value ratio on its inventory improve materially within days.&nbsp;</p><p>Compare that to commercial real estate during the pandemic, when the collateral underpinning office and retail loans collapsed at precisely the moment borrowers most needed support. Commodity-backed finance did not behave that way then, and it is not behaving that way now.</p><h2 style="font-size: 2rem">Why shocks hit harder now</h2><p>There is a structural reason geopolitical disruptions feel more economically severe today than they did twenty years ago, which has less to do with the nature of the conflicts than the fragility of the supply chains they are hitting.&nbsp;</p><p>Since the end of the last commodity supercycle in the early 2010s, capital stopped flowing into commodity production infrastructure at anything like the scale required. Investment in mines, refineries, processing capacity and logistics networks fell away as capital chased technology and asset-light businesses instead.&nbsp;</p><p>Institutional commodity allocations dropped from around 12 per cent of total portfolios in 2012 to less than two per cent by the mid-2020s.¹³ Chinese state capital moved into the space vacated by Western investors to secure proprietary assets across Africa and other emerging regions.</p><p>The consequence of that retrenchment is now visible and cracks in supply chains are becoming increasingly painful. For example, global spare oil capacity is concentrated primarily in Saudi Arabia and the UAE – the same countries currently precluded from exporting their products.¹⁴ Meanwhile, the critical mineral supply chain (necessary for everything from renewable energy and electronics to defence) also relies on one country – China.</p><p>The interconnections that built up quietly over years of underinvestment have suddenly and uncomfortably become central to market conversations worldwide. They will not be resolved quickly: rebuilding supply chain resilience will take years and require a significant reallocation of capital back into the physical world.</p><h2 style="font-size: 2rem">What this means for investors</h2><p>For trade finance investors, the current environment demonstrates the structural strengths of the asset class rather than exposing its weaknesses. Short loan maturities mean pricing adjusts within a single cycle. Self-liquidating structures mean capital is not trapped when conditions change. And collateral that appreciates when commodity prices rise provides a natural hedge against the disruptions causing volatility.&nbsp;</p><p>More than 80 per cent of global trade moves by sea.¹⁵ The goods that flow through this system – energy, food, industrial materials – are not optional. They are essential to modern economies, which is why every historical disruption to maritime trade has eventually been resolved. The Ever Given was freed. Russian oil found new buyers and Europe found new gas suppliers after 2022. Trade adapts.</p><p>The Strait of Hormuz may not stay inaccessible in the longer term. But while it remains closed, markets for financing essential commodity flows are tighter, more valuable and in need of participants with genuine expertise, real collateral and operational flexibility. That is good description of where opportunities can emerge.</p><p><br></p><p><strong>Endnotes</strong></p><ol><li>Port Economics, Management and Policy, “Blockage of the Suez Canal, March 2021.”&nbsp;</li><li>US Energy Information Administration, “World Oil Transit Chokepoints,” 2024.</li><li>Middle East Briefing, “The Strait of Hormuz Crisis: Iran Conflict Impact on Oil and Markets,” March 2026.&nbsp;</li><li>Marketplace, “War in the Middle East is pushing up agricultural commodities' prices,” March 2026</li><li>Al Jazeera, “Iran war threatens prolonged impact on energy markets as oil prices rise,” March 2026.&nbsp;</li><li>World Trade Organization, “World Trade Statistical Review 2021.”&nbsp;</li><li>WTO/UNCTAD, “Highlights of world trade in 2020 and the impact of COVID-19.”&nbsp;</li><li>nternational Energy Agency, 2022–2023.&nbsp;</li><li>UNCTAD, “Impact to global trade of disruption of shipping routes,” 2024.&nbsp;</li><li>JP Morgan Research, “The Impacts of the Red Sea Shipping Crisis,” 2024.&nbsp;</li><li>Kpler, “The top 5 container carriers diverting ships after the Strait of Hormuz disruption,” March 2026</li><li>Asian Development Bank, “Trade Finance Gaps, Growth, and Jobs Survey,” 2023 and 2025.&nbsp;</li><li>Bloomberg, “The power of a commodities allocation: A little goes a long way,” October 2024.&nbsp;</li><li>Kpler, “US-Iran Conflict: Strait of Hormuz Crisis Reshapes Global Oil Markets,” March 2026.</li><li>UNCTAD, “Review of Maritime Transport,” 2023.</li></ol><p><br></p><p style="font-size: 12px"><strong>Important Information:</strong></p><p style="font-size: 12px">This content has been prepared solely for informational purposes by Gemcorp (as defined below), is confidential and may not be reproduced.</p><p style="font-size: 12px">This content does not constitute an offer or solicitation of an offer with respect to the purchase or sale of any security and should not be relied upon when evaluating the merits of investing in any securities or form the basis of an investment decision. The information in this content has been obtained from various third-party sources, some of them forward-looking statements and/or projections. Any forward-looking statements and/or projections are inherently subject to material business, economic and competitive risks and uncertainties, many of which are beyond Gemcorp’s control. In addition, these forward-looking statements and/or projections are subject to assumptions with respect to future business strategies and decisions that are subject to change. No representation is made or assurance given that such statements, opinions, estimates, projections and/or forecasts in this content are complete or correct or that any objectives set out in this content will be achieved. Gemcorp does not undertake to update this information, nor does it accept any liability for any such third-party information or any conclusions set out herein.</p><p style="font-size: 12px">No statement in this content, including any references to specific securities, asset classes and/or financial markets is intended to or should be construed as investment, legal, accounting, business or tax advice. The contents of this content do not constitute an investment recommendation. This content expresses no views as to the suitability of any investments described herein to the individual circumstances of any recipient. If an offer to sell investments is made in the future, it will be made by a formal prospectus, instrument of incorporation and subscription document, or similar documents and not on the basis of the information contained in this content, and any such offer will only be made to the extent it is in accordance with the laws and regulations applicable in the jurisdiction in which such offer is being made.</p><p style="font-size: 12px">This content is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.</p><p style="font-size: 12px">In the United Kingdom, this content is communicated to Professional Clients only by Gemcorp Capital Management Limited which is authorised and regulated by the Financial Conduct Authority (the “FCA”) (Reference number: 952794) and has its registered address at 1 New Burlington Place, London, W1S 2HR, United Kingdom.</p><p style="font-size: 12px">In the United States, Gemcorp Capital Advisors, LLC, is registered as an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (CRD # 329386/SEC#:801-130200).</p><p style="font-size: 12px">In the Abu Dhabi Global Market (“ADGM”), this content is communicated to Professional Clients only by Gemcorp Capital Management (Middle East) Limited with registered office address Unit 20, Level 7, Al Maryah Tower, Abu Dhabi Global Market Square, Al Maryah Island, Abu Dhabi, United Arab Emirates and which is regulated by the ADGM Financial Services Regulatory Authority (Financial Services Permission Number: 220156). Professional Clients has the meaning prescribed to it in the FSRA’s Handbook.</p><p style="font-size: 12px">Gemcorp Capital Management Limited, Gemcorp Capital Advisors LLC and Gemcorp Capital Management (Middle East) Limited and other affiliated entities, together “Gemcorp”.</p>