Geopolitical Risk Premiums in 2026: How Conflict Costs Are Priced into Markets

The geopolitical risk premium of 2026 is not a fleeting market reaction. It is the price of a fundamental realignment, where control over critical minerals has become a central strategic objective for nations. This is the new norm: resource nationalism, where mineral-rich countries trade access for security and leverage, and major powers like the U.S. are racing to secure their own supply chains. The mechanism is clear and accelerating.

At its core, this shift is a direct response to the intensifying U.S.-China competition, which BlackRock's Geopolitical Risk Indicator now identifies as a top-tier threat. The indicator shows heightened market attention driven by this decoupling, with AI and its enabling physical infrastructure treated as national security assets. In this high-stakes environment, the Democratic Republic of Congo's recent strategic partnership with the United States exemplifies the new calculus. In early December, the DRC signed a deal trading preferential American access to its copper, cobalt and lithium for U.S. security assurances. This move, proposed by Congolese President Tshisekedi in February, is a symptom of a resurgent wave of resource nationalism, where governments seek to convert mineral wealth into diplomatic and strategic influence.

The United States is not just a passive recipient of this trend; it is actively accelerating it through policy. The drive for resource independence has become a pillar of the U.S. economic agenda. The Trump administration moved to undo a Biden-era mining ban on federal lands in northern Minnesota, aiming to unlock vast domestic deposits of copper, nickel and cobalt. This complex maneuver seeks to revive the proposed Twin Metals mine, a project that has been blocked and reinstated across administrations. The goal is explicit: to end reliance on foreign adversaries like China for the metals that power electric vehicles and clean energy. This policy push is mirrored in other sectors, from a $2.7 billion Department of Energy plan to end reliance on Russian nuclear fuel to new attention on strategic metals like tungsten.

The bottom line is that the global economy is undergoing a historic change, from one driven by fuels to one defined by minerals. This structural shift prices conflict costs into markets because the strategic prize is no longer just territory or trade routes-it is the control of the physical infrastructure for the next industrial era. The DRC-U.S. deal and the U.S. reversal of a mining ban are not isolated incidents. They are the blueprint for a new geopolitical order where mineral access is a currency of power, and the risk premium reflects the volatility of this new scramble.

Market Reactions: Complacency Amidst Rising Risk

The market's response to this escalating geopolitical landscape is one of striking calm. Despite material increases in strategic friction, major indices have moved into 2026 at all-time highs. The S&P 500 continues to trade at record levels, and other key indicators show limited stress. Financial markets show limited signs of stress, with the US dollar grinding higher and Brent crude stabilizing and rebounding from the $60 level. This complacency is the central puzzle. Investors appear to be treating recent, high-profile escalations as manageable noise rather than a fundamental shift in risk.

This detachment is evident in the behavior of traditional safe-haven assets. As tensions rise, copper and gold have both climbed in tandem, a dynamic that signals a complex market view. Gold, the classic flight-to-safety asset, is rallying on pure geopolitical fear. Copper, however, is being bid up for a different reason: it is a critical industrial metal, and its price is being driven by the very resource nationalism that is fueling the conflict. The DRC signed a deal trading preferential American access to its copper, cobalt and lithium for U.S. security assurances. In this setup, investors are simultaneously paying a premium for safety and for the strategic metals that power the new global scramble. The result is a market that is pricing in risk, but not necessarily pricing it in correctly.

The critical question is whether this current structure can absorb a significant escalation. The recent sharp escalation in diplomatic tensions between the United States and Denmark over Greenland is a potential catalyst. Talks between the US and Denmark are set to play out, and while a deal is the market's base case, the outcome and its implications for US-NATO relations will be key. This situation exemplifies the execution risk inherent in these strategies. These geopolitical strategies carry substantial execution risk. Even a low probability of miscalculation or escalation justifies a higher risk premium. History shows that when geopolitical risk crystallizes, market reactions tend to be swift, nonlinear, and highly correlated across asset classes. The current calm may be the eye of the storm.

Pricing the Premium: Asset Class Implications and Price Records

The geopolitical risk premium is no longer a theoretical concept; it is being priced directly into asset values. Nowhere is this clearer than in the physical markets for critical minerals. Copper, the linchpin of the energy transition, has reached record highs near $12,000 per tonne. This price is a direct reflection of supply chain fears and strategic hoarding, as major powers and corporations seek to secure their futures in a fragmented world. The premium is being paid not just for the metal, but for the certainty of its flow.

This dynamic is reshaping equity valuations. Companies that possess secure, diversified supply chains are likely to command a premium. The strategic calculus is now a key valuation metric. Consider the strategic partnership between the Democratic Republic of Congo and the United States, where preferential access to copper and cobalt is traded for security assurances. This deal, and similar moves by other mineral-rich nations, creates a new tier of corporate risk. Firms with direct, stable access to such resources gain a tangible competitive advantage, which markets are beginning to recognize. Conversely, those reliant on volatile or contested sources face a persistent discount.

Yet the premium carries a heavy cost for long-term investment. The heightened risk environment penalizes capital expenditure and stretches project timelines. The very policies designed to mitigate risk-like the U.S. push to unlock vast domestic deposits of copper, nickel and cobalt by overturning a federal mining ban-introduce their own layers of regulatory and political uncertainty. This creates a persistent drag on the long-term investment needed to build out the energy transition. The risk premium, in other words, is a tax on future growth.

The bottom line is a market in two minds. It is paying record prices for physical metals while simultaneously withholding capital for the projects that will produce them. The DRC-U.S. deal and the U.S. policy reversal on mining are not just diplomatic or legislative moves; they are the strategic bets that are now being priced into every supply chain decision and every equity valuation. The premium is real, but its ultimate cost will be measured in the pace of the global energy shift.

Catalysts and Guardrails: Scenarios for the Risk Premium

The geopolitical risk premium of 2026 is not a static number; it is a dynamic variable shaped by specific catalysts and constrained by structural guardrails. The most immediate test is the outcome of U.S.-Denmark talks over Greenland. This dispute is a critical signal. A resolution that secures U.S. influence over the Arctic territory would validate a broader strategy of securing strategic resources and geographic chokepoints. It would demonstrate the U.S. willingness to act decisively, potentially emboldening similar moves elsewhere. Yet, the talks also carry high execution risk. As noted, these geopolitical strategies carry substantial execution risk, and a breakdown could trigger a sharp reassessment of U.S. reliability and its impact on NATO, acting as a powerful catalyst for a premium spike.

Beyond this specific flashpoint, watch for policy actions that have already proven their power to reshape markets. The U.S. move to undo a Biden-era mining ban on federal lands in northern Minnesota is a prime example. Such targeted tariffs or stockpiling initiatives are not just domestic economic tools; they are direct interventions that create immediate price volatility and force supply chains to adapt. They are the mechanisms through which geopolitical friction translates into tangible market costs.

The primary risk, however, is that markets remain complacent. Despite the structural shifts and clear catalysts, financial markets show limited signs of stress and continue to trade at record highs. This detachment is the central vulnerability. It suggests investors are underestimating the long-term cost of this friction. The premium is not just about today's headlines; it is a tax on future growth. As history shows, when geopolitical risk crystallizes, reactions are swift and correlated. The current calm may be the eye of the storm, with the real cost measured in stretched project timelines and withheld capital expenditure.

The bottom line is that the risk premium has become a structural feature of the new mineral-driven economy. It is priced into record copper prices and corporate valuations, yet it is also constrained by the very market stability that policymakers appear to be managing. The guardrail is the feedback loop between market health, economic conditions, and political capital. For now, that loop seems to be holding. But the catalysts are building. The premium will remain elevated as long as the strategic scramble for resources continues to define global power.