In international relations, power has never disappeared. In recent decades it has remained hidden behind institutions, treaties, and global trade. Today it has returned to show itself without a mask.
“Power is power,” to quote Queen Cersei from “Game of Thrones,” when diplomatic relations regress to the power politics of the twentieth century, when the new global disorder seems no longer based, or at least not only, on GDP and wealth creation.
The principle of force seems to prevail especially in the battered Middle East, where recent history strings together a painful rosary of tragedies.
In 1977 John Kenneth Galbraith defined the Age of Uncertainty as those years marked by disorientation: the 1973 oil crisis ended the “Thirty Glorious” years of post-war growth, and advanced countries suddenly found themselves vulnerable to energy blackmail. The uncertainty described by Galbraith was the rational doubt of those no longer able to predict the direction of economic development and the spread of prosperity.
In 2022, at GAM, we updated this view by speaking of “Hyper-uncertainty,” reflecting a context where the speed and complexity of global shocks made any projection practically impossible.
Today even that definition seems inadequate; we have entered the Age of Chaos.
This is a structural change, not a semantic difference: we are no longer facing a future difficult to decipher, but a violent fragmentation of the world order and the multiplication of centers of power. The United States is retreating into the stronghold of isolationist nationalism, and the political and economic influence spaces left unguarded are being filled by new alliances and new actors.
Galbraith’s uncertainty was born from a system still seeking balance; the current chaos arises from the rejection of the old balance and the inability (and inadequacy) to build a new one. The rules of international law, a common barrier to crises, are ignored or trampled, giving way to a sort of “geopolitical anarchy” where military force and the systematic breaking of historic diplomatic relations and economic ties have become the only constants.
Markets, however, seem to show a certain habituation to the new age of chaos, almost “mithridatized” to permanent emergencies.
Last week, stock markets corrected without panic; the expectation prevails of a disengagement from a war that everyone agrees should be brief. As indeed was the brief “Twelve-Day War” of June 2025.
The most violent reaction to the attack on Iran was the double-digit rise in energy commodities; everything will depend on the duration: in last June’s conflict, the objective was circumscribed and clearly communicated—the destruction of Iranian nuclear sites. This time the objectives are confused and overlapping; the medium-term strategy does not seem as clear.
Oil prices are tense but are in a state of “backwardation,” meaning the short-term price is higher than that of futures contracts with longer maturities, a sign of fears of supply shocks and immediate scarcity.
Not only oil tankers and cargo ships pass through the Strait of Hormuz; part of the near future of stock markets also passes through there. Crucial for global energy supply, markets are questioning how long the acute phase of the crisis will last while normalization remains the baseline scenario.
Nevertheless, complacency itself is a danger; the risks of tail risks of possible escalations should not be overlooked.
Even with the reopening of the Strait, risk perception will remain high, with consequences on insurance coverage, which will be more expensive or even revoked, on merchant ship routes, at risk of course reversals or deviations, on air traffic and trade flows that could continue to suffer interruptions. These phenomena will contribute to increasing costs and delays along the main global east-west trade corridors.
Concerns about inflation have pushed Treasury yields higher, and the dollar has strengthened.
Higher oil prices, and their inevitable transmission channel to the real economy, complicate the work of central banks, which may be forced to maintain restrictive financial conditions, with the trajectory of disinflation more uncertain and irregular.
In these same days, the Chinese government has revised growth expectations downward, bringing them to 4.5%–5.0%. The slowdown in Iranian oil supplies, although not decisive for the country’s energy needs (China has substantial reserves), nevertheless contributes to increasing the cost of energy procurement.
For portfolio allocation choices, such an unpredictable scenario suggests selective caution, not disengagement. Broad diversification, including in commodities, has long been recommended, not an indiscriminate risk reduction. Recent market history shows that geopolitical shocks are often absorbed relatively quickly; they become structural breaking events only when supply destruction is persistent.
The cost in human lives remains always immeasurable compared to any consequences on financial markets. In its tragedy, this is a high-impact event but not yet a systemic event.
The decisive variables remain time and the price of oil. In an era dominated by geopolitical noise, investors should remember a simple rule: observe the signals, the mechanisms of economic transmission, not chase the noise of headlines.
Even in the age of chaos, markets continue to reward those who remain patient and capable of distinguishing between real risk and momentary fear.
