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Escalating tensions in the Middle East have once again put energy security at the top of the agenda, with Brent crude rising sharply. At the same time, gold is trading near record highs as central banks continue to accumulate reserves; and US electricity demand is rising again after years of stagnation, driven by AI and data centres. Meanwhile, copper consumption is projected to increase from 27.6 million tonnes today to 42.3 million tonnes by 2050 as electrification accelerates.
A new commodity order is taking shape, defined by geopolitical fragmentation, electrification, supply constraints, regionalisation of energy and materials markets, and a re-ordering of global supply chains. Yet despite the strategic importance of commodities, most equity investors have little exposure to these dynamic, diversifying and potentially alpha-generating markets. Natural resource equities (the shares of companies in the commodity value chain) account for just 7.6%1 of the MSCI ACWI index, and only around 6.6%2 of the global equity benchmark excluding chemicals – underscoring why a dedicated natural resource equity allocation may be appropriate to tap their potential.
Here, Ninety One’s Natural Resources Equity team puts current headlines in the context of the structural changes reshaping commodity markets and explains the potential roles of natural resources equities in a portfolio.
Geopolitics and energy security reshape supply
As events in the Middle East highlight, oil markets are increasingly driven by shifting geopolitics rather than pure supply/demand forces. Sanctions, elections and territorial tensions are influencing flows and pricing, while strategic stockpiling has increased as nations such as China look to safeguard supply. To a higher degree than previously, governments view energy as much more than just an economic input; it is a strategic asset. Control of energy supply is becoming central to national resilience and industrial policy. Geopolitics is now embedded in pricing, and volatility is likely to remain a structural feature of oil markets.
AI, electrification and a supercycle in power and materials
Electricity demand is entering a new phase. US on-grid power demand is rising again after years of stagnation, driven partly by electrification, data centres and AI. The AI arms race is not just about chips and software; it is about power. Data centres and digital infrastructure require reliable, scalable energy, driving renewed demand for natural gas and accelerating investment in grid infrastructure and renewables.
Copper sits at the heart of electrification. Reflecting the scale of demand from the energy transition, grid expansion and data centre build-out, copper consumption is projected to increase from 27.6 million tonnes today to 42.3 million tonnes by 20503. From transmission networks to renewable build-out and data centres, the intensity of copper use is rising; yet supply growth is constrained by geology, permitting and capital discipline.
Gold: a barometer of trust and monetary change
Gold has been one of the defining market stories of the past year, with the precious metal responding to deep questions around fiscal sustainability, currency stability and geopolitical fragmentation. Prices have risen sharply alongside a softer US dollar, while central banks are persistent net buyers – reflecting a structural shift in reserve management. Yet emerging market central bank gold holdings still sit materially below developed market levels, suggesting scope for larger allocations.
After a period of margin pressure at gold producers in the wake of the pandemic, higher gold prices have now translated into much higher margins. Balance sheets are stronger, capital allocation is more disciplined, and shareholder returns have improved materially.
Agriculture: the overlooked strategic resource
Agriculture is re-emerging as a strategic focus amid climate volatility, shifting trade flows and food-security concerns. Climate risk, geopolitics and changing consumption patterns are reshaping global food systems; in many regions, self-sufficiency is declining, increasing the strategic importance of reliable supply. For investors, agriculture is a vast, diverse but often overlooked opportunity set. Agricultural equities can provide diversification within the broader resource complex, particularly during periods when metals and mining face cyclical pressure.
Natural resource equities: resilient amid inflation and volatility
Natural resource equities have historically been among the best-performing asset classes during periods of high inflation4. They have also outperformed physical commodities over the long term and have historically demonstrated low to negative correlation to major equity styles and other real assets. And today, there are structural tailwinds behind many commodity markets, driven by geopolitics, technology and supply constraints.
While our broad outlook for natural resources equities is positive, we strongly advocate an active investment approach: dispersion within the sector is significant across regions, cost curves, capital-allocation frameworks and balance-sheet strength. In addition, commodity markets are increasingly regional, with pricing dynamics diverging across jurisdictions. Through active management, we think investors can best access the diversification and alpha potential of natural resource equities – by navigating volatility, avoiding weaker balance sheets, and focusing on businesses with resilient cashflows and disciplined capital allocation.
1 Source: as at 31 January 2026
2 Source: as at 9 February 2026
3 Source: BHP analysis, Ninety One
4 Source: Ninety One, Bloomberg. Based on analysis of ‘high’, ‘low’ and ‘normal’ inflation regimes from 31 December 2001 through 31 December 2025. High inflation is above 3.2% (the 75% percentile of the data). Low inflation is below 1.6% (the 25th percentile of the data). Normal inflation is between 1.6% and 3.2%. Comparators represented as follows. Inflation proxied by CPI US YoY. Fixed income = Bbg Global Agg UH USD, Global equities = MSCI ACWI USD, TIPS = Bbg US Treasury Inflation Notes (TIPS), futures-based commodities = BCOM Index (TR), natural resources equities S&P GNR Index, Gold = US4/oz, Global infrastructure = S&P Global Listed Infrastructure Index USD, Global real estate = MSCI World/Real Estate Index USD.*real return: 12 month rolling net of CPI YoY.
