War & Your Wallet (2026): How Global Conflicts Move Oil, Gold, and Food Prices

Wars take place in different locations, and the financial consequences of those conflicts are not always contained to just that geographic area.

If you have seen a spike in the price of oil due to news of violence or a jump in the price of gold as a country struggles with political instability, you have witnessed this relationship first hand. The relationship between war and commodity markets is real, thoroughly documented, and affects everyday consumer purchasing power much more than most people think.

This article will show how wars around the world affect the price of oil, gold and food; how these changes can affect your daily life; and what a responsible investor or household budgeter should do with that information.

Why Conflict and Commodity Markets Are Connected

When markets trade in commodities such as oil, gold, grains and other raw materials they are often quite sensitive to disruptions or uncertainty in global commodities supply chains. One of the most consistent sources of both disruption and uncertainty is war.

When a war occurs in or around a major oil producing region, traders and buyers begin factoring in the possibility that there will be disruptions to oil supply, even before any oil supply disruption occurs. The same occurs in grain when there is any war affecting a major grain exporting country. There is a tendency for gold prices to increase during times of systemic risk across many different asset classes, as gold serves as a “safe haven” for people to hold their wealth during periods of uncertainty in other asset classes.

Key point: market pricing is based on expectation, not just upon current commercial reality. A conflict that has yet to result in a single barrel of oil being affected may still cause a significant move in oil prices if traders believe that there is a possibility of an oil supply disruption coming as a result of that conflict.

How Conflict Moves Oil Prices

Oil is the commodity most visibly affected by geopolitical disruptions, and the reason is simple geography. A significant share of the world’s oil reserves are concentrated in politically volatile regions. The Middle East alone accounts for roughly a third of global oil production. The Strait of Hormuz, a narrow waterway between Iran and the Arabian Peninsula, carries an estimated 20% of the world’s oil by sea. A blockade or conflict that closes that strait would be a serious supply event for global markets.

The 1973 Arab oil embargo is the most famous example of conflict-driven oil disruption, but it’s far from the only one. The Gulf War in 1990 caused oil prices to roughly double in a matter of months. The lead-up to the U.S. invasion of Iraq in 2003 created sustained price pressure. Russia’s invasion of Ukraine in 2022 drove European natural gas prices to extreme levels and contributed to a significant spike in Brent crude.

The mechanism is straightforward: less supply, or the credible threat of less supply, pushes prices higher. Since oil is an input into almost every good and service, including the fuel that moves food from farms to stores, those higher prices eventually show up everywhere.

For Canadian households, oil price spikes matter in two directions. As consumers, you pay more at the pump and often more for home heating. As Canadians living in an oil-producing country, higher global oil prices can actually boost the economy in certain regions, particularly Alberta, while creating headwinds in others.

A Recent Scenario Worth Understanding

Russia’s full-scale invasion of Ukraine in February 2022 offers a clear and recent example of how conflict reshapes commodity markets in real time.

Before the invasion, Russia supplied roughly 40% of the European Union’s natural gas. It was also a major exporter of oil. Ukraine was one of the world’s largest exporters of wheat and sunflower oil.

Within weeks of the invasion, European natural gas prices spiked dramatically. Oil markets surged, with Brent crude reaching levels not seen in years. Wheat prices jumped significantly on global exchanges as traders anticipated supply shortages from a region that feeds large parts of the Middle East and Africa.

The effects weren’t abstract. In Canada and across the world, grocery prices rose partly because of the energy costs embedded in growing, processing, and transporting food. Fuel surcharges appeared on delivery services and freight costs. Fertilizer prices, which are tied to natural gas production, soared and added pressure to farming costs globally.

None of this happened because the war reached Canadian soil. It happened because commodity markets are global, and a disruption anywhere in a connected supply chain eventually touches everyone.

How Conflict Moves Gold Prices

Gold’s relationship with conflict is different from oil’s. It’s not primarily a supply story. Gold mining isn’t concentrated in conflict zones the way oil production sometimes is. Gold rises during conflict mostly because of what investors do with their money when they’re afraid.

In periods of serious geopolitical uncertainty, investors tend to move money out of assets they consider risky, like stocks and emerging market currencies, and into things they consider safe. Government bonds from stable countries are one option. Gold is another, and often the more compelling one because it’s not tied to any single government’s financial health.

This flight to safety has been observed consistently across decades of market history. During the 1973 oil crisis, the Gulf War, the 2008 financial crisis, and the early stages of the COVID-19 pandemic, gold prices rose. The same pattern emerged in 2022 when Russia invaded Ukraine, though prices were volatile as other factors competed for influence.

Gold doesn’t always go up during conflict and it doesn’t always stay up. But its role as a store of value that exists outside the financial system makes it a natural destination for nervous money.

How Conflict Disrupts Food Prices

Food is the commodity impact that most directly touches everyday household budgets, and it tends to get less attention than oil and gold in financial commentary.

The connection between conflict and food prices runs through several channels. First, agricultural land in conflict zones goes unfarmed. Second, the export infrastructure, ports, railroads, shipping routes, gets disrupted or destroyed. Third, energy costs, which are a major input into fertilizer and agricultural machinery, rise when oil rises, pushing up the cost of growing food before it even leaves the farm.

The Ukraine conflict was an unusually sharp demonstration of this. Ukraine and Russia together account for a significant portion of global wheat, corn, and sunflower oil exports. When that supply was disrupted, countries that depend heavily on Black Sea grain imports, particularly in the Middle East and North Africa, faced serious food security challenges. Prices in global markets reflected that uncertainty.

For Canadian households, the food price impact of international conflicts is typically felt as a gradual rise in grocery costs rather than an overnight shock. But the cumulative effect over months of elevated commodity prices is real and measurable, particularly for lower-income households who spend a larger share of their income on food.

What This Means Today

In 2026, the world remains in a period of elevated geopolitical tension. Ongoing conflicts in multiple regions, shifting trade relationships, and competition over energy resources all create a backdrop where commodity price volatility is higher than it was in the relatively stable 2010s.

For investors, this doesn’t mean panic-buying gold or energy stocks every time a conflict makes headlines. Markets are efficient enough that obvious developments are often already priced in before most retail investors can react. What it does mean is that some exposure to commodities or commodity-adjacent assets, as part of a diversified portfolio, can help cushion a portfolio during periods when equities and bonds face geopolitical headwinds at the same time.

For households managing a budget, it means building more flexibility into monthly spending plans during periods of elevated global tension. Fuel and food costs are more variable than most fixed expenses, and a conflict halfway around the world can change what you pay for both within weeks.

Common Mistake to Avoid

Investors may make common mistakes in their trading (such as selling stocks at a time of market panic) or panic selling of an asset to buy other competing assets that have recently had phenomenal performance (like buying gold at the peak of fear). Similarly, when investors sell energy to buy high-priced energy after the price of oil reaches Panicky Mode and subsequently declines significantly.

The historical record of how the stock market reacts to geopolitical events is pretty predictable - large down markets after the first shock, occasionally almost entirely (or even completely) recaptured during the following months, assuming a geopolitical conflict does not fundamentally alter the structure of the world economy. Investors who sold out of their Gulf War positions in the 1990 sell-off, Iraq invasion in 2003, and Russia-Ukraine sell-off in the early weeks, or waited too long to reinvest after they sold ultimately performed worse than those investors who stayed the course.

What seems to the average person as a permanent fixture or new normal after a couple of weeks into a conflict will most likely look very different six months down the road. So while it’s not an excuse to disregard geopolitical risks altogether, you should consider how to react to them by making the appropriate allocation to your portfolio instead of reacting haphazardly to perceived stress.

Conclusion

The connection between global conflict and commodity price is substantial and extends to affect the price you pay at the pump for gas, as well as the price of a loaf of bread at your local grocery store. The three commodities most likely to be impacted are oil, gold and food; however, they are affected in very different ways.

The price of oil is influenced by the disruption of supply and perceived risk of potential disruption of supply. The price of gold is influenced by fear and a flight to safety. The price of food is impacted by: the price of energy and the disruption to agriculture caused by conflicts, and the abundance of collateral impacts to food prices as a result of the above two.

You do not need to predict where the next future global conflict will take place to understand how each conflict connection to the commodity price will ultimately appear in your wallet. What you do need to understand is: when there is a negative occurrence in the world, the negative effect will transfer to the market; therefore; any resulting price increase will eventually show up in your finances. In summary, you should develop your financial future based on the realities of this connection and prepare for potential risk versus creating and maintaining a financial future based on constant or permanent stability by focusing on this information.

Frequently Asked Questions

Why do oil prices increase when conflicts break out, even if they are far from Canada?

Oil is a globally traded commodity with prices determined by international markets. When conflicts threaten supply from major producing regions or disrupt key shipping routes, traders start to price in the risk of future shortages even before the supply is actually affected. Since Canada imports some refined petroleum products and its domestic fuel prices are influenced by global benchmarks, these price changes reach Canadian consumers whether or not the conflict directly involves Canadian supply chains.

Is gold always a safe investment during wartime?

Gold usually rises during the initial stages of geopolitical uncertainty because investors see it as a safe-haven asset. However, it doesn’t always maintain those gains. Once the crisis stabilizes or investors move back into other assets, gold prices can drop sharply. It is most effective as a long-term diversification tool in a portfolio rather than as a short-term trade based on a specific conflict. Buying gold after prices have already risen significantly due to a crisis carries its own risks.

How do wars in other countries lead to higher food prices in Canada?

Food prices in Canada are connected to global commodity markets, which link Canadian grocery stores to agricultural regions around the world. When conflicts disrupt exports of wheat, corn, or cooking oil from major producing countries, global prices increase and this eventually affects food processors, retailers, and consumers. Additionally, energy costs involved in growing, transporting, and processing food go up when oil prices rise, further adding to grocery bills.bills.

If you want to test this framework with your own numbers, use the interactive calculator and review the historical invest scenarios.