How Wars, Sanctions, Tariffs & Export Bans Move Markets

Wars start markets. Sanctions reshape them. Tariffs distort them. Export bans whip them. In the last five years, many major commodity moves have had a geopolitical fingerprint somewhere on them.

Why Geopolitics Is Now a Master Variable

For most of the post-Cold War period, commodities were largely a story of supply, demand, and weather. Geopolitics was a sideshow — an occasional shock that briefly disturbed a fundamentally market-driven system. Since 2022, that has flipped. Geopolitics is no longer the sideshow. It is now one of the dominant forces in many commodity markets.

Three structural shifts are responsible:

1. The end of frictionless globalization. The assumption that goods, capital, and energy would move freely across borders has been replaced by an active project of "friend-shoring," "de-risking," and weaponized interdependence.
2. The return of great-power competition. US-China rivalry, the Russia-Ukraine war, and the Iran-Israel conflict have made strategic commodities — oil, gas, grain, fertilizer, rare earths, lithium, copper, semiconductors — instruments of statecraft.
3. The willingness to use trade tools aggressively. Tariffs, sanctions, and export bans were once exceptional measures. They are now routine policy levers, deployed faster, broader, and with less warning than at any time in the post-WWII era.

For commodity operators, this means geopolitical literacy is no longer optional. Knowing the difference between a Section 232 tariff, a Section 301 tariff, an OFAC sanction, an export ban, and a strategic stockpile release is now as important as knowing the futures curve.

Wars: The Most Violent Repricers

Wars affect commodities through four primary channels: direct supply disruption, infrastructure destruction, transit risk, and demand destruction in the war zone itself.

Russia-Ukraine (2022 onward) rewrote European energy, global wheat, and the fertilizer market in weeks. Russia is one of the world's largest exporters of crude, refined products, natural gas, wheat, fertilizer, palladium, and aluminium. Ukraine is a top exporter of wheat, corn, sunflower oil, and iron ore. When the war started, European gas prices spiked over 5x. Wheat hit multi-decade highs. The fertilizer complex (urea, potash, DAP) exploded, with downstream effects on global food security still playing out three years later.

The war birthed three structural shifts that remain in place:

• The European LNG pivot — Europe replaced Russian pipeline gas with LNG from the US, Qatar, and elsewhere, permanently raising European energy costs and tightening global LNG markets.
• The "shadow fleet" — a parallel tanker fleet built to move sanctioned Russian crude to India, China, Türkiye, and other buyers at discounted prices, creating two-tier oil pricing.
• The fertilizer crisis — countries dependent on Russian and Belarusian potash and urea (including India and Brazil) faced supply and price shocks that pressured food production.

The Iran conflict (2025–2026) repriced energy and shipping. The escalation through 2025 — including US airstrikes on Iranian nuclear facilities and Iran's retaliatory pressure on Hormuz traffic — culminated in the Hormuz disruption of March–April 2026, taking out millions of barrels per day of effective Gulf production capacity and triggering one of the sharpest monthly moves in Brent in recent memory. LNG, fertilizer, aluminium, and grain markets all reverberated.

The signal to watch with wars: not the headlines, but the second-order flows. Where does the displaced supply go? Who absorbs the cheap sanctioned crude? Which freight routes are now longer? Which insurers refuse to cover which cargoes? The geopolitical event is usually priced in within days; the supply-chain rewiring takes months and is where real opportunity (and risk) lives.

Sanctions: The Slow Strangulation

Sanctions are commodity warfare without the kinetics. They work by cutting off a country, company, or sector from the global financial and trade system. In practice, they create:

• Two-tier pricing — sanctioned crude trades at a discount; non-sanctioned crude at a premium. The Russian Urals-Brent discount widened to over $30/barrel at its peak in 2022.
• Shadow flows — sanctioned goods don't disappear; they move through opaque channels. The shadow fleet for Russian oil now carries hundreds of millions of barrels per year through ship-to-ship transfers, flag changes, and ownership obfuscation.
• Compliance burdens — non-sanctioned buyers face screening, due diligence, and secondary sanctions risk. Banks and insurers withdraw from grey-zone deals, even when they're technically legal.
• Strategic substitution — sanctioned countries rotate suppliers and buyers. Russia pivoted oil exports from Europe to India and China within months.

Three notable recent sanctions developments:

Russia oil sanctions intensified in October 2025 when the US imposed full blocking sanctions on Russia's two largest oil producers, materially tightening compliance pressure on shadow-fleet operations and triggering EU and UK sanctions alignment. The Russian discount widened again.

Iran "maximum pressure" returned in early 2025 with a series of sanctions on Tehran's revenue sources and defence networks, escalating later in the year. By April 2026, the Iran conflict had become the single largest live geopolitical risk premium in the oil market.

Venezuela tightened through 2025, with US tanker seizures and pressure on Venezuelan oil flows continuing into early 2026. Venezuelan crude — primarily heavy sour — affects US Gulf refinery feedstock and global heavy-sour pricing.

The signal to watch with sanctions: the secondary sanctions threshold. The market is far more responsive to sanctions that threaten third parties than to sanctions on the primary target alone. When the US warns banks in India, the UAE, or Türkiye about Russian or Iranian flows, the price reaction is sharper than when the original sanction was announced.

Tariffs: The Distortion Engine

Tariffs do not destroy supply. They redirect it. And in redirecting it, they create the price dislocations that traders live for.

The 2025–26 US tariff cycle has been historically aggressive. Highlights include:

• Reciprocal tariffs imposed in April 2025 under emergency powers, ranging up to 125% on certain countries before being negotiated down to 10% under a series of trade truces.
• Section 232 actions and investigations covering steel, aluminium, copper, lumber, semiconductors, and other strategic sectors — invoked on national security grounds and largely unaffected by court challenges.
• A 25% tariff on Indian goods tied specifically to India's purchases of Russian oil — a novel use of tariffs as a tool of secondary sanctions enforcement. Lifted on Indian goods in February 2026 as part of a US-India trade deal under which India agreed to stop buying Russian oil.
• US-China truces repeatedly extended through 2025 and into 2026, with the November 2025 agreement extending the tariff reduction through November 2026 and adding fentanyl tariff reductions on the US side and removal of certain Chinese retaliatory measures and a suspension of Chinese rare earth export controls.
• The IEEPA tariff ruling. On 20 February 2026, the US Supreme Court ruled that the International Emergency Economic Powers Act does not authorize the emergency tariffs imposed in 2025 — but the administration immediately invoked Section 122 of the Trade Act of 1974 to impose a new 10% global tariff in their place, rising to 15%. Section 232 and 301 tariffs were unaffected.

The practical effects on commodities:

• Copper pre-loading. US tariff threats on refined copper through 2025 pulled massive copper inventories into US warehouses ahead of expected duties, leaving non-US warehouses tight.
• Steel and aluminium trade flows redirected from US-bound to other markets, often at distressed prices.
• Semiconductor and rare earth chokepoints became central to US-China negotiating leverage, with both sides willing to suspend and reinstate controls multiple times in a single year.
• Indian export competitiveness to the US became a high-stakes variable — directly affecting steel, aluminium, textiles, and pharmaceuticals — with policy oscillating between punitive and accommodative within months.

The signal to watch with tariffs: implementation dates, exclusions, and stacking rules. Most tariffs have effective dates that create scramble windows, exclusion lists that vary by HTS code, and stacking interactions with other tariffs. A 25% tariff that doesn't apply because of a Section 232 stack-down rule is functionally a 0% tariff. The detail matters more than the headline.

Export Bans: The Sudden Shock

Export bans are the most violent of the four geopolitical tools because they typically arrive with no warning and reverse market expectations overnight. They are usually deployed by producer countries trying to control domestic inflation, secure domestic supply, or extract leverage.

The textbook recent examples:

• Indonesia's palm oil export ban (April–May 2022) — imposed to control domestic cooking oil prices, it sent global palm oil prices to record highs and forced India to scramble for alternative supply. Lifted within three weeks but left lasting volatility.
• India's wheat export ban (May 2022) — imposed despite India's status as a top wheat producer, after a brutal heatwave compressed yields. Global wheat prices spiked.
• India's rice export restrictions (2023–24) — non-basmati white rice exports banned to control domestic food inflation. Sent global rice prices, particularly in African markets, up sharply. The ban was eased and modified multiple times through 2024.
• Indonesia's nickel export restrictions (ongoing) — banning unprocessed nickel ore exports to force investment in domestic processing. Reshaped the global nickel and stainless steel industry and pulled in massive Chinese investment.
• China's rare earth and gallium/germanium controls — periodic restrictions used as leverage in US-China negotiations, suspended as part of the November 2025 truce but always reinstatable.
• China's tungsten export restrictions — imposed in late 2025 and contributing to the dramatic price moves in tungsten through early 2026.

The signal to watch with export bans: producer-country domestic food and energy inflation, currency stress, and election calendars. Export bans almost always correlate with a domestic political pressure point — a price spike at home, a coming election, a currency crisis. Watch the producer country's domestic CPI release as carefully as you watch the commodity's price.

How These Tools Stack and Interact

The most damaging market moves come when these tools combine. Russia-Ukraine wasn't just a war — it was war plus sanctions plus shadow flows plus export bans (Russia restricted fertilizer exports, India restricted wheat). The Iran conflict wasn't just a war — it was war plus snapped-back EU and UK sanctions plus Hormuz freight risk plus secondary sanctions threats on Indian and Chinese buyers.

When you see two or more of these tools deployed simultaneously on the same commodity, the move tends to be both larger and more sustained than market consensus expects.

The India Lens

India sits at a unique intersection of all four tools, often on the receiving end:

• As a consumer: India's crude (Russia), palm oil (Indonesia/Malaysia), fertilizer (Russia/Belarus/Morocco), pulses (Canada/Australia/Myanmar), and edible oil supply chains have all been touched by geopolitics in the past three years. Russia-discount crude saved India tens of billions of dollars in import bills through 2022–25.
• As an exporter: India's wheat, rice, sugar, onion, and certain steel exports have been periodically restricted by Indian policy itself — most prominently in 2022–24 — to control domestic inflation.
• As a tariff target: US tariffs on Indian goods in 2025 (and the Russian-oil-linked 25% surcharge) directly affected pharmaceuticals, textiles, jewellery, auto components, and steel. The February 2026 trade deal restored predictability but left structural risks.
• As a sanctions navigator: Indian refiners, banks, and shipping companies have had to build sophisticated sanctions screening to handle Russian and Iranian flows without triggering US secondary sanctions. This is now a core competency for any large Indian commodity-exposed business.

The Indian commodity operator's job description in 2026 is, in many ways, the job of a geopolitical analyst with a procurement budget.

Mini Case Study: How Indian Refiners Played the Russia Discount

When Russia's crude was sanctioned by Western buyers in 2022, two paths opened for Indian refiners. The first: stay away, avoid sanctions risk, pay full market price for non-Russian crude. The second: buy heavily discounted Russian crude through shadow-fleet logistics, refine it, and export refined products globally — generally lawful where compliant with applicable sanctions and price-cap rules.

Indian refiners (Reliance, Indian Oil, BPCL, HPCL, Nayara) chose the second path aggressively. At peaks, India's Russian crude imports rose from minimal pre-war levels to over 1.5 million barrels per day. Refining margins expanded. India quietly became one of the largest exporters of refined products derived from Russian crude — to Europe, of all places.

The arbitrage worked for nearly three years, generating an estimated $10–15 billion in savings on India's oil import bill over that period. Then the rules changed. In August 2025, the US imposed a 25% tariff specifically tied to India's Russian oil purchases. India initially pushed back but ultimately reached a deal in February 2026 to wind down Russian oil purchases in exchange for tariff relief.

The arbitrage didn't disappear by accident — it was killed by a policy lever pulled in Washington. Refiners that had read the geopolitical writing on the wall and started rotating supply diversification in mid-2025 came through smoothly. Those that were complacent paid in margin compression and emergency restructuring.

The lesson: geopolitical arbitrages don't end with the market. They end with the policy.

The Operator's Geopolitical Checklist

For any commodity exposure, a serious operator runs through a geopolitical layer every month:

1. Producer concentration risk. What share of supply comes from one country or one region? Concentration is the precondition for geopolitical risk.
2. Sanctions exposure. Are any of your suppliers, customers, or counterparties under sanctions, near sanctions, or in jurisdictions facing secondary sanctions risk?
3. Tariff exposure. What is the current tariff structure on your inputs and outputs? What is calendared to change?
4. Export ban risk. What is the producer country's domestic price situation? Is there political pressure to restrict exports?
5. Choke point risk. Does your commodity transit Hormuz, Suez, Panama, Malacca, or any other vulnerable corridor?
6. Currency risk. Sanctions and tariffs often trigger currency moves that compound the commodity price impact.
7. Diversification. If your top supplier disappeared tomorrow, where would you go? Have you tested that path?

This checklist takes an hour a month. It is the difference between being surprised by geopolitics and being prepared for it.

The Bottom Line

Wars, sanctions, tariffs, and export bans are no longer rare events that occasionally disturb commodity markets. They have become a central feature of commodity markets. The operators who treat geopolitics as a discipline — tracking it on a calendar, mapping it into scenarios, embedding it in procurement strategy — are the ones quietly extracting margin from the chaos. The operators who treat it as background noise are the ones writing the cheques.

In commodities today, the geopolitical layer is foundational. Much of everything else is built on top of it.