Whether it’s the Russia-Ukraine conflict, Israeli-Hamas war, or Houthi missile attacks on shipping in the Red Sea, geopolitical tensions have a direct impact on global commerce and trade. Moreover, these events exacerbate global instability and pose significant threats to energy and sustainability markets. This year, understanding the fundamentals of geopolitics and how it intertwines with these crucial domains is more important than ever.
The root of geopolitical tensions lies in the competition for resources and power. Fossil fuels are a primary source of energy for many nations and the concentration of those resources in specific geographical regions has historically led to strategic rivalries and military intervention. Environmental concerns, such as climate change and the need to mitigate it, are adding a new dimension to energy geopolitics and creating new arenas for potential conflict.
For example, the race for critical minerals such as lithium, cobalt, and rare earth elements essential for renewable energy technologies and electric vehicles is a growing source of geopolitical tension. These minerals are concentrated in a few geographic regions, often in politically unstable or complex international relationships, making their acquisition an important strategic priority for nations.
Trade is another critical arena for geopolitical tensions, particularly when one nation imposes protectionist measures against others. The escalating US-China trade war, for example, threatens the stability of global trade agreements and could have ripple effects on supply chains across the globe.
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