War-proof your assets as 1970s-style energy risks rise

The CEO of a global financial advisory body has warned that anti-war funds should be investors’ first priority amid rising tensions across the Middle East. devere group.

Nigel Green’s warning comes as missile attacks reported “extensive damage” to Iran’s South Pars gas field – the world’s largest – at the Ras Laffan LNG terminal on Qatar, and Brent crude rose more than 4% to more than $110 a barrel, highlighting a growing threat to global energy supplies and trade flows.

A ship has also been attacked east of the Strait of Hormuz, underscoring the growing risks to global shipping routes.

He says, “Investors need to review their wealth strategies following direct attacks on critical energy infrastructure and the increasing risks to the movement of oil and gas through key routes such as the Strait of Hormuz.

“This is already affecting prices. And it appears to be increasing.”

A large portion of global LNG as well as approximately one-fifth of the world’s oil supply pass through the Strait of Hormuz.

Qatar’s Ras Laffan alone accounts for about 20% of global liquefied natural gas production, much of it destined for Asia.

A disruption on this scale would have serious implications for inflation, corporate margins and global growth.

Nigel Green warns that the situation could be compared to the energy shocks of the 1970s, when supply disruptions led to prolonged inflation and forced a major reassessment of risk appetite in global markets.

He says: “There are clear parallels with the energy crisis of the 1970s. Supply shocks of this nature rarely remain controlled. They roil economies, drive up costs and force investors to rethink positions.

“Markets are just beginning to adjust to that reality.”

He stressed that “portfolios built on assumptions of stable energy prices and frictionless global trade are becoming increasingly vulnerable.”

The Deavere CEO says investors need to think carefully about how their assets are positioned in this environment. War-proofing is about resilience – ensuring portfolios can withstand disruption rather than relying on stability, says Nigel Green.

He outlined key considerations for investors looking to strengthen resilience.

Gold should be considered as a portfolio diversifier. “Periods of geopolitical escalation typically increase demand for hard assets which can help offset currency volatility and market stress.”

Energy performance is also becoming more relevant. “Oil and gas producers, particularly those operating outside high-risk areas, are likely to benefit from continued supply disruptions and increased prices as markets adjust to the disruption.”

Commodities may need to be looked at more broadly. “Rising energy costs often impact broader input prices across the global economy, reinforcing their role during periods of inflation.”

Sector exposure should be reviewed. “Industries dependent on cheap fuel and uninterrupted global logistics, including airlines and parts of heavy manufacturing, face increasing pressure if disruptions continue.

“In contrast, energy, defense and infrastructure-related sectors may see strong demand as governments and companies react to increased risks.”

Geographic diversification remains important. “Concentrated risks in Middle East energy-dependent regions, particularly parts of Asia,” could increase insecurity, while broader global risks could help reduce risks.

The currency situation should also be assessed. “Energy-importing economies may come under pressure, while the US dollar and commodity-linked currencies have historically strengthened during times of geopolitical tensions and rising oil prices.”

“This is a structural change in the way risk is priced,” says Nigel Green. “Energy infrastructure is being targeted, and supply chains are under pressure in a way that mirrors previous global shocks.

“Investors who remain calm are taking unnecessary risks.”

He concludes, “History shows that energy shocks reshape markets in profound ways.

“The crisis of the 1970s drove inflation, altered capital flows, and rewarded those who diversified across real assets, sectors, and currencies.

“The current situation has many similar characteristics with a direct threat to supplies, transportation routes and pricing stability.

“Investors should have a clear view of their risk – considering diversification across asset classes, sectors and geographies, and ensuring they are not overly dependent on any one outcome.”

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