Ashhar Alam/New Delhi

Global markets have remained surprisingly steady despite rising geopolitical tensions in key regions such as Venezuela, Greenland, and Iran, though investor caution is evident in commodities like oil and gold, which spiked briefly by 7–8 % early in 2026, according to a new report.

The report, Geopolitics heats up from Venezuela, to Greenland to Iran, but investors shrug. For how long?, examines how escalating conflicts could still pose significant risks to global growth and financial stability.

The report identifies two main scenarios that could trigger severe market reactions. First, an escalation of hostilities in the Middle East, particularly involving the United States and Iran, could push crude oil prices sharply higher, potentially threatening global economic growth and market confidence. Second, while unlikely, a forceful U.S. annexation of Greenland could have major geopolitical and economic consequences, including disruption of trade alliances, NATO tensions, and market turmoil.

Allianz projects that in such extreme scenarios, global GDP growth could drop by about one percentage point from 2.9 %, while financial markets could experience sharp declines in equities (except defence stocks), widening credit spreads, a stronger gold market, and a weaker euro. Meanwhile, instability in Venezuela could continue to unsettle the region, potentially disrupting trade and prompting capital outflows, though moderate investment and cooperation initiatives could offset some negative effects.

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The report underscores that while current markets are relatively resilient, geopolitical risks remain elevated, and investors may need to prepare for potential volatility if flashpoints intensify. Allianz emphasizes that the stability observed so far could be temporary, and tail-risk events in the Middle East, Greenland, or South America could quickly shift market dynamics.