The Iran war has sent commodities soaring, leading to large gains and even greater volatility. The postwar period promises to be just as interesting.
To gauge where commodities could go next -- and whether investors ought to get involved -- we spoke with Samantha Dart, the co-head of global commodities research at Goldman Sachs, which she joined 20 years ago as an energy strategist.
Barron's spoke with Dart on July 8 about where oil and gas go from here, how gold could rebound, and why copper could be the most interesting commodity of all. An edited version of the conversation follows.
Barron's: The Iran war is in a state of limbo; on any given day, it can seem like it's escalating or on the verge of ending. But people are already talking about what we've learned from the war, and what will change afterward. What are some of the commodities lessons you're taking from this?
Samantha Dart: We think of commodities as global markets, but the supply side of them can be incredibly geographically concentrated. Countries have to take into account that this concentration can be used as leverage in geopolitical disputes. In response, we might see countries in Asia, and Europe to some extent, look to ensure a little bit more security of energy supply. The way to do that is to try to become less vulnerable to an oil and gas supply shock.
We might see higher usage of electric vehicles, higher installations of solar panels, maybe even higher coal production for those countries that have the ability to do that. If you look at the data, you can already see how many more solar panels China is selling to Europe, to Asia. Already, EV sales penetration is increasing, and not just in China.
It makes sense that countries are changing their strategies. Should investors do the same?
This war and the supply shock were just the latest example of why an investment portfolio can benefit from commodity exposure, from gold to metals to energy. I think this Iran conflict is going to strengthen a lot of the big themes behind increasing commodity demand going forward. If you're an investor and you traditionally look at an equity and bond portfolio, it really pays to have that diversification into commodities.
For most people, when they think about the economic impact of the Iran war, they think about what it has done to oil and gas -- how much it caused prices to rise. Is that too narrow a view?
Oil and gas have an intuitive link with our everyday consumption. We need natural gas for heating purposes in the winter. We need it for power generation. We need oil for transportation. We need it for petrochemical production, and so on. But we think people need to take a step back and look more broadly across the commodity complex.
What kinds of commodities should they be focused on?
Copper really stands out. The copper market has one of the best demand stories on a long-term basis. All the big themes we have in front of us right now -- from electric-grid investment to electric vehicles to data centers to defense spending -- everything points to more copper demand. And not just now, but structurally going forward.
For years, people have referred to copper as "Dr. Copper" because it's considered to be a good gauge of the health of the economy. It has also been dependent for years on the Chinese real estate market, which isn't doing well now. Do you think something has changed that gives copper better prospects?
That's a good point. When copper was primarily tied to the construction sector, it made it very cyclical. If you have a hot construction sector, then your demand is going to grow a lot, but if you don't, it won't.
Domestic activity in China isn't fantastic. Our China economists have reported that domestic consumption in China overall is only growing 1% to 2% a year, whereas gross domestic product is growing 4% to 5%. So, we see China growing because of manufacturing for exports, as opposed to domestic activity. But the one thing that hasn't slowed down is domestic investment in grid infrastructure.
You have a shift in what drives demand in China -- away from cyclical drivers like construction and toward more structural drivers like investment in the grid, investment in data centers, the artificial-intelligence race, defense spending. Those are all structural trends. That turns copper demand into a much more solid growth trend.
Don't get me wrong, China is extremely important for copper demand, no question. But the way China continues to invest in the grid, even when domestic activity is somewhat slow, suggests that demand for copper is going to be very robust going forward.
You talked about some of the behavior changes we've already begun to see, like people buying EVs. Do you think the war will have a long-term dampening effect on demand for oil and gas?
Before this conflict, we wrote about our long-term views for oil demand growth. We have expected growth to be positive through the end of the next decade. This conflict, I think, will give us some pause. We haven't changed our outlook yet, but these are discussions we're starting to have. Because EV sales and solar panel sales moved a lot during the war, we now have to gauge how much of that is a new structural trend versus something that might slow down again.
I think that over the next six months, we're going to learn a lot about how much of the shift in behavior is permanent rather than transient. Directionally, I think it's clear, it's going to change to a lower number. How much, though? Does it mean a peak in global oil demand in the mid 2030s or still in the late 2030s? There's more that we need to gauge before saying that with confidence.
Oil has had quite a wild ride this year. But Goldman's estimate for average Brent crude prices in 2027 is $75 a barrel, not far from where it is today. Why invest in it if it's going to be flat-ish?
I think the biggest reason is that it can work as a hedge against supply disruptions. It goes back to the point that we tend to think of commodities as global markets, but supply is much more concentrated than we care to remember. When you have a geopolitical dispute like this one, that's when that concentration in supply really impacts the market. Most oil supply comes either from Russia, from the Middle East, or from the U.S. This shock showed us that if you stop one of those, it's a big problem, right? And when you do, if you look across different assets, it is the commodity whose supply was impacted that is going to perform better than anything else.
So, invest in assets like oil even when stocks are doing well?
If you look at the performance of BCOM [the Bloomberg Commodity Index], for example, it was higher than equities and anything else. Even though equities were breaking record after record, BCOM did better.
If you look at BCOM's energy segment, it did much better -- more than twice as high of a total return year to date than equities. It's good to have that exposure to energy commodities, because you don't know when a supply disruption is going to happen, but when it does, it threatens growth, it threatens inflation. Having that exposure hedges the investor against that shock, and what it can do to equities and other assets.
It isn't always the same commodity that will be working, which is good because you want those commodities not to be fully correlated with each other. You want the risks across commodity markets to help offset each other. I think you have opportunities to hedge yourself when investing in energy, and also when investing in industrial metals and precious metals. That BCOM exposure even protects you through gold against a fiscal sustainability risk.
Speaking of gold, where do you think it goes from here? It's down 28% from its record high in January.
Gold isn't done. Gold has very strong structural support coming from central bank buying. This is a diversifying effort from emerging market central banks to reduce exposure to dollar funds that could theoretically be frozen, just like what happened to Russia in 2022. That's part of it. I think the other part of it, which we've been paying more attention to over the past six to eight months, is private-sector diversification. Given that the first Federal Reserve meeting under Chairman Kevin Walsh was more hawkish, people weren't as concerned with Fed independence. But if you bring back some debt, and sustainability concerns, you could see some private diversification into gold.
Should investors who agree with you try to pick individual commodities that'll do particularly well? What is the best way for people to get exposure?
I say to a lot of the non-commodity-specialist clients that we talk to that they can use the commodity indexes. BCOM in particular is one of the most used today. Of course, in terms of how you allocate that within your portfolio, commodities don't usually have the same allocation as equities or bonds. It's not going to be the same, because volatility is usually higher.
Thank you, Samantha.
Write to Avi Salzman at avi.salzman@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 15, 2026 11:08 ET (15:08 GMT)
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