“History doesn’t repeat itself, but it often rhymes.” Mark Twain
Most things that feel new aren’t actually new. They just wear different clothes.
Every generation thinks it’s facing a unique set of risks—until you zoom out and realise the same patterns have been playing out for decades, even centuries.
As someone once said, there is no real present or future—just the past, showing up again in slightly different ways.
The problem isn’t that we don’t have the information. It’s that we forget how familiar it all is.
Geopolitical risk is just a fancy way of saying: the world is unpredictable, and that unpredictability has a price, not just in human terms, but in markets, businesses, and everyday life.
Think of the global economy like a finely tuned engine. Oil is the fuel. Now imagine 55% of that fuel sitting in one of the most unstable neighbourhoods on Earth—the Middle East.
It doesn’t take a full-blown disaster to shake things. Even the threat of disruption—like tensions around the Strait of Hormuz, where roughly 20% of global oil flows—can send prices jumping.
The ripple effect nobody escapes
When oil prices rise, it’s not just about petrol getting expensive.
It’s like raising the cost of oxygen for the entire economy.
- Businesses pay more to produce and transport goods
- Inflation creeps higher
- Consumers spend less
- Growth slows down
Oil-importing countries—like much of Europe and parts of Asia—feel it the most. Exporters benefit, sure. But globally, it’s a net drag. History has shown this again and again, from the 1970s energy crisis to more recent shocks.
War amplifies all of this.
Supply chains break. Infrastructure gets damaged. Uncertainty spreads faster than any missile. Investors, like nervous birds, fly toward safety—selling equities, pushing up borrowing costs and tightening financial conditions.
The current moment: controlled fire or something bigger?
Right now, the situation around Iran feels like a controlled burn that could, under the wrong conditions, turn into a wildfire.
The US and Israel are using airpower to dismantle Iran’s military and nuclear capabilities—targeting infrastructure, weakening proxies like Hezbollah and the Houthis. It’s precise, calculated, and deliberately avoiding a ground invasion.
But wars are like chess games where the board keeps changing.
Iran’s leverage isn’t just military—it’s strategic. Threatening shipping routes, targeting infrastructure, and creating just enough disruption to hurt without fully closing the system. Think of it less like flipping a switch and more like slowly tightening a valve.
The real question isn’t just who’s winning militarily but what happens after.
- Does the conflict stay regional?
- Does it spill into global power competition with China or Russia?
- Does oil stay above $100 long enough to trigger a broader economic shock?
It’s not World War III—at least not yet. That line only gets crossed if another major power directly steps in. For now, it’s a high-stakes regional conflict with global consequences.
The nuclear paradox
There’s an uncomfortable truth in all of this.
Countries with nuclear weapons tend to become… untouchable.
North Korea is the clearest example. Once it crossed that line, the rules changed. As one strategist put it, nuclear weapons don’t guarantee peace—but they dramatically raise the cost of conflict.
That’s why Iran’s nuclear ambitions are so central to this story. The fear isn’t just the weapon itself—it’s what it represents: permanence, deterrence, and a shift in the balance of power.
Friedrich Hegel reminded us, “The only thing we learn from history is that we learn nothing from history.”
Meanwhile, a second fault line is forming
While the Middle East dominates headlines, another tension simmers quietly: China and Taiwan.
This one is less about oil and more about chips—the invisible backbone of modern life.
Nearly all the world’s most advanced semiconductors are made in Taiwan. Companies like Apple and Nvidia depend on them. If that supply chain breaks, it’s not just a market correction—it’s a technological shock.
The US and China are already in a different kind of war: capital, technology, and manufacturing. Less visible, but no less important.
And unlike oil, you can’t just drill more advanced chips overnight.
So where does that leave investors?
Here’s where things get interesting.
Because, despite all this chaos, markets have always had a strange resilience.
Warren Buffett once said, “We have never forgone an attractive purchase because of the macro or political environment.”
That sounds almost absurd in moments like this. But history backs him up.
If you missed just the 10 best days in the S&P 500 over the past 30 years, your returns would have been cut in half. And those best days? They often come right after the worst ones—when fear is at its peak.
It’s a bit like standing in a storm. Everything tells you to run, but the long-term investor quietly opens an umbrella and keeps walking.
A different way to think about risk
At its core, geopolitical risk isn’t something you eliminate—it’s something you price.
Life insurance companies insure people, knowing everyone eventually dies. It’s not about certainty; it’s about probability.
Investing works the same way.
Yes, the world feels fragile right now:
- A volatile Middle East
- Nuclear tensions
- A potential Taiwan flashpoint
- Rising energy shocks
But it always felt fragile, just in different ways.
Conclusion
Maybe the real lesson isn’t about predicting whether the next crisis becomes something bigger.
It’s about accepting that uncertainty is the background noise of history—not the exception.
And in that noise, there’s always a choice: react to the headlines, or step back and ask what actually changes over time—and what doesn’t.
Because ultimately, volatility is the price of opportunity.
But over time, human progress and markets have a habit of moving forward anyway.
“There is nothing new under the sun.” Ecclesiastes 1:9
Awet Ghirmay, Head of Investment Research
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Risk warnings
The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
