With the world’s physical resources back at the center of the global economy, amid geopolitical events disrupting energy and commodity flows, wealth managers discuss their investment preferences.

After the Middle East conflict caused oil and fertilizer prices to surge, portfolio managers from Ninety One’s natural resources team discussed the global outlook for oil, AI’s power demands, metals, fertilizer and food security at a media roundtable in London yesterday entitled The Resource Crunch: Conflict, AI and the Race for Energy, Metals and Food.

Across agriculture, disruption to fertilizer and energy markets is colliding with growing weather risks. The result is a resource squeeze that could reach beyond spot commodity markets into inflation, food prices and the cost of the AI build-out.

At the media event, Paul Gooden, portfolio manager and head of natural resources at Ninety One, said that with Brent crude oil prices at $110 a barrel, it is hard to argue that they will stay that high in six months' time. He is bullish on energy-related and agricultural-related commodities, precious metals and neutral on base metals.

Middle East oil exports are recovering and the oil is getting out, Gooden said, but it is still not at pre-conflict levels: â€śThings are not back to normal yet. China had built big inventories before the conflict which created less demand but that is now increasing once more. We have lost one billion barrels of inventory and there is probably another one billion barrels, and it could take another nine months to reach an all time low. But that probably won’t happen,” he said.

He does not think that there is a shortage of oil or that the world will run out. The spot price is volatile while the five-year oil price is more stable. He also thinks it makes sense for the UK government to start drilling for oil again in the North Sea, although he doubts it would have a big impact on oil prices globally.

Gooden thinks oil demand will continue to rise, but like a number of firms such as BNP Paribas Wealth Management, he believes that the higher prices have accelerated the move toward renewable energy and nuclear, especially in Europe, and the need to not rely on fossil fuels. See here.

Although the US has been threatening 10-15 per cent import tariffs from January, George Cheveley, portfolio manager of natural resources at Ninety One, remains positive on the outlook for copper, like other investment managers. Copper has been registering record prices, driven by increasing demand for artificial intelligence, data centers, tech and renewables.

Head of next generation research at Swiss private bank Julius Baer, Carsten Menke's, conviction in long-term demand growth for copper has also increased, underpinning his expectation that copper should slip into structural deficits later this decade. He is focused on this compelling long-term outlook, and has upgraded his view to neutral, while lifting his price targets for the metal. Menke also acknowledges the risk of a short-term and market mood-driven setback, in particular, should US President Trump actively decide against import tariffs, potentially causing a 10 per cent to 15 per cent correction in copper prices. That said, considering the very compelling outlook, Menke would treat such a setback as a longer-term buying opportunity.

Meanwhile, Cheveley highlighted that lithium demand is growing fast, with prices recovering this year, despite a fall last month. “It’s an exciting market and I expect more investment in the next five years,” he said.

Rising electricity demand and volatility from AI workloads are increasing the value of energy storage. Lithium-ion batteries remain the dominant solution for short to medium-term duration storage, directly linking AI to lithium demand. Grid power storage also adds a second durable pillar of demand while electrification expanded lithium’s demand base through electric vehicles.

Despite rising costs, Cheveley remains positive about the outlook for gold, seen as a safe haven by many, and driven by demand from central banks, not just China, and de-dollarization.

With nitrogen fertilizer prices soaring, as a result of the conflict, Cheveley said the market is very volatile and he expects that trend to continue. In view of the high prices, farmers are substituting potash where they can, he said, which has not been so affected by the closure of the Straits of Hormuz and the global resource squeeze. Canada is the world’s largest producer while Belarus and Russia are also major producers and exporters of potash.