The 2022 Ukraine Invasion — Energy & Defence Supercycle

The Russian invasion of Ukraine on February 24, 2022 was the most significant geopolitical shock to commodity markets since the 1973 OPEC oil embargo. Unlike 2008 or 2020, which were demand-shock cycles, Ukraine was a supply-shock cycle: it permanently removed significant volumes of Russian oil, gas, wheat and fertilizers from European markets. The result was not a short sharp spike but a structural repositioning of European energy, defence and food supply chains that is still playing out in 2026.

The Immediate Commodity Response

The Defence Rearmament Cycle

The most enduring consequence of Ukraine for equity investors was not in energy but in defence. NATO members, confronted with the reality of land war in Europe, began rapid defence spending increases. Germany announced a €100bn Sondervermögen (special defence fund) in February 2022 — the first major German rearmament since World War II. Every NATO member committed to reaching 2% of GDP in defence spending, with many targeting 3%.

This triggered a multi-year rearmament cycle that is still in early stages in 2026. Rheinmetall, the German ammunition and vehicle manufacturer, rose from €100 in February 2022 to over €860 by March 2026 — +767% in 48 months. Saab, the Swedish defence company, rose +196% in 25 months. BAE Systems, Leonardo and Thales all delivered 90–140% returns over the same period.

The Energy Transition Acceleration

Ukraine dramatically accelerated Europe's energy transition — not out of environmental conviction but out of energy security necessity. The EU's REPowerEU plan, announced in May 2022, targeted eliminating Russian gas dependency by 2027. This required massive acceleration of solar, wind, heat pump and LNG import infrastructure. Vestas, Iberdrola, Ørsted and Siemens Energy all surged initially before facing headwinds from interest rate rises and supply chain costs in 2023.

The Fertilizer Shock

Russia and Belarus together supply approximately 40% of global potash and 20% of global urea. Sanctions and trade disruptions cut these flows dramatically in 2022, sending fertilizer prices to records. Yara International's urea business generated extraordinary profits in 2022. However, the fertilizer spike was shorter-lived than energy: alternative supply sources (Middle East, North Africa, North America) responded within 12 months, and prices normalised by 2023.

Winners and Losers: The Ukraine Cycle Portfolio

The Hormuz Extension: 2026

The geopolitical commodity cycle initiated by Ukraine found a second act in early 2026 with Iran's effective closure of the Strait of Hormuz. VLCC tanker rates spiked to $519,000/day — a new all-time record. Brent surged to $108/bbl. The Hormuz crisis represents a continuation of the geopolitically-driven commodity supercycle that began in February 2022: a world in which supply routes, energy flows and commodity access are shaped by conflict and sanctions rather than pure market economics.

What Ukraine Changed Permanently

Unlike the 2008 and 2020 cycles, which were temporary demand shocks followed by full recovery to prior patterns, Ukraine has permanently altered several commodity market structures. European gas will never be as cheap as Russian pipeline gas was pre-2022. NATO defence spending will not return to post-Cold War lows. European LNG import infrastructure (regasification terminals, longer shipping routes) has been permanently built out. These structural changes mean that the cycle signals for energy and defence operate in a different regime post-2022 — with higher price floors and higher sustained demand for defence production.