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The Bid is BlackRock’s investment podcast where investment professionals break down what’s happening in the world of investing and explores the forces changing the economy and finance. From stock market outlooks to geopolitics and technology, BlackRock speaks to thought leaders and industry experts from about biggest trends moving markets.

Defense, Geopolitics & Energy Security

Geopolitical competition is reshaping global markets. BlackRock’s Anna Parker and Yasmin Meissner explore how rising defense spending, energy security and AI are driving a new resilience economy—and why supply chains, critical technologies and strategic choke points increasingly matter for investors.

275. How Geopolitics Is Redefining Defense, Energy, Technology and Global Markets

Web title: How Geopolitics Is Redefining Defense, Energy, Technology and Global Markets

Geopolitical tensions are increasingly reshaping the global economy. Defense spending is rising, energy security has returned to the policy agenda, and competition over artificial intelligence and critical technologies is becoming an increasingly important part of national security. At the same time, conflicts and supply chain disruptions are exposing vulnerabilities in an interconnected global system.

In this episode of The Bid, host Oscar Pulido speaks with Anna Parker, part of the Geopolitical Research and Strategy team at BlackRock, and Yasmin Meissner, portfolio manager for Thematic Strategies at BlackRock. Together, they look beyond short-term geopolitical headlines to explore what BlackRock calls the resilience economy—the growing focus on strengthening security and reducing strategic dependencies across energy, defense and technology.

Anna examines how geopolitical shocks are changing the global energy system and why countries are investing in greater resilience. Yasmin explores the transformation underway in defense, from autonomous systems and counter-drone technology to software and space. They also discuss the geopolitical competition surrounding AI, the push for technology sovereignty, and why strategic choke points including rare earths, semiconductors and energy infrastructure could have increasingly important implications for global markets.

Key insights

Why geopolitical fragmentation is reshaping the global economy and increasing the focus on resilience.
How energy security is evolving as countries respond to geopolitical shocks and vulnerabilities in global supply.
Why defense technology is changing, from autonomous systems and counter-drone capabilities to software and space.
How AI is becoming part of geopolitical competition and driving greater focus on technology sovereignty.
Where strategic choke points are emerging across rare earths, semiconductors and energy infrastructure.
What the resilience economy could mean for investors as capital flows toward energy, defense and technology.

Keywords: geopolitics, defense investing, energy security, artificial intelligence, geopolitical fragmentation, resilience economy, technology sovereignty, global markets

Sources: We can buy more weapons. We can’t buy more time, Defense One, 2026; Anduril, Department of War Sign Production Agreement for Surface-Launched Barracuda-500M, Anduril, 2026; Background Briefing on FY 2026 Defense Budget, U.S. Department of War, 2025; FY 2027 Defense Space Budget: Dramatic and Targeted Growth, Center for Space Policy and Strategy, The Aerospace Corporation, 2026; Technological Evolution on the Battlefield, Center for Strategic and International Studies (CSIS), 2025; Results of Ukraine’s Defense Industry in 2025: FPV Drones, National Security and Defense Council of Ukraine, 2026; Leonidas High-Power Microwave: Directed Energy for cUAS, cUAS Swarms, Counter Electronics, Epirus; Estimating the Cost of Combat Operations Against Iran, Congressional Budget Office, 2026; Global Data Centre Outlook 2026-50: Malaysia Key Findings, PwC, 2026; Cloud Computing, European Commission, 2026; Oil markets strain to plug the gap left by Middle East supply shortfall, International Energy Agency (IEA), 2026; IEA Member countries to carry out largest ever oil stock release amid market disruptions from Middle East conflict, International Energy Agency (IEA), 2026; Middle East Crude Oil Exports Back at Prewar Levels, Analysts Say, The Wall Street Journal, 2026; Why oil prices haven’t gone crazy despite 5 months of US-Iran war, Reuters, 2026; Sheltering from Oil Shocks: Measures to Reduce Impacts on Households and Businesses, International Energy Agency (IEA), 2026; Trends in World Military Expenditure, 2025, Stockholm International Peace Research Institute (SIPRI), 2026; Impacts of Middle East conflict set to reshape energy investment plans as disruptions put focus on security, International Energy Agency (IEA), 2026.

Written Disclosures In Episode Description:

This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to any company or investment strategy mentioned is for illustrative purposes only and not investment advice. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures.

<<TRANSCRIPT>>

Oscar Pulido: Geopolitical tensions are increasingly reshaping the global economy. Defense spending is rising, energy security has moved back up the policy agenda, and competition over artificial intelligence and critical technologies is becoming an important part of national security. At the same time, conflicts and supply chain disruptions are exposing just how interconnected, and in some cases vulnerable, the global system has become. So, what does this changing geopolitical landscape mean for markets and investors?

Welcome to the Bid, where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Pulido.

Today I'm joined by Anna Parker, part of the Geopolitical Research and Strategy team at BlackRock, and Yasmin Meissner, portfolio manager for Thematic Strategies at BlackRock. Together, we'll look beyond the geopolitical headlines and explore how a greater focus on national security and resilience is reshaping defense, energy, and technology. We'll discuss what these shifts could mean for markets, how the defense landscape is evolving, and the strategic vulnerabilities and choke points investors should be watching

Anna and Yasmin, thank you so much for joining us on The Bid.

Anna Parker: Thank you so much for having us, Oscar. It's amazing to be here.

Yasmin Meissner: Thanks for having us. Looking forward to a good discussion

Oscar Pulido: Well, it's great to have you both on. We're going to talk about geopolitics, and it's worth remembering that the BlackRock Investment Institute a couple of years ago talked about a number of different mega forces, one of those was geopolitical fragmentation. And a mega force really is meant to describe a structural theme that we think is going to be present in markets for many years to come. So, it's fair to say that there's a lot of noise going on right now with respect to geopolitics. And Anna, if I could start with you, when you step back from the headlines, what's the bigger story that investors should focus on?

Anna Parker: So, I think you're right that the headlines tend to focus on volatility, shock, churn, chaos in the environment. But that's really not the most important theme for investors to focus on, and certainly not for long-term investors. What I think actually is the most important theme here is around the way that the global economy is rewiring to focus more on resilience. That's happening as a result of geopolitical competition, fragmentation, and a series of shocks.

So, if you break down what's happening, I would say the first thing is that competition between the US and China is accelerating and intensifying, and that's particularly true around AI. We see this as a structural and durable fact about the world, and one that extends well beyond this period of stability in the US-China relationship that we're in right now.

The second thing I would say is about fragmentation. You mentioned that BlackRock's Investment Institute sees geopolitical fragmentation as an important theme, shaping the global economy. That remains true. When we coined that term, we did so to talk about the world organizing itself as a result of US-China competition into different blocs. And what we're seeing right now is actually yet another round of fragmentation that's happening as a result of the US moving to reset its relationships geopolitically and economically with the rest of the world.

The other thing is the Iran war, right? This is the latest in a series of shocks, but fundamentally disruptive to the global economy. And it's the latest on top of a variety of other shocks that we've seen over the last five years: record inflation, trade disruption, the COVID pandemic, Russia's invasion of Ukraine,

 So, competition, fragmentation, shocks, they're all coming together to do a few things for us. First is exposing the vulnerabilities in the global economy that stem from dependency and the ways that those dependencies can become weaponized in times of geopolitical conflict or stress.

We've seen two examples of that in the last two years. The first was the emergence of a choke point in the technology supply chain around critical minerals and rare earths. And the second is a physical choke point in the global energy market at the Strait of Hormuz during the Iran war.

What countries are doing in response to this is thinking about what are their dependencies that they can de-risk, and what are those that are not going to be tolerable over time. We're seeing, major investments to reduce dependencies in strategic sectors. Certainly energy, defense, technology. this is the global resilience economy, on energy, we see a huge amount of investment going towards energy security. On defense, global defense spending increased significantly for the last 11 years in a row. And we're up about forty percent just over the last decade. On technology, obviously, this is the largest Capex cycle that we've seen in history. A lot of that is animated and shaped by competition between the US and China, but also the desire for countries in between them to pursue technology sovereignty.

Right. When we talk about geopolitics, I think we often think about the latest conflict that's in the headlines and the short-term impact on markets.

Oscar Pulido: And Anna, what you've helped us do is zoom out and really think about this more strategically. So, there is a lot to unpack here. And Yasmine, maybe I could come to you. if you're an investor, what does all of this mean for markets, and how are you seeing it from your seat?

Yasmin Meissner:

So, Anna introduced this idea of the resilience economy across three core pillars. That's energy, defense, and AI. The three are linked to each other. AI needs power, any country that's thinking seriously about its defense strategy is going to care an awful lot about its energy security. Defense increasingly is being characterized by technology, so think of autonomous weapons. And then AI, as Anna said, is becoming a strategic asset for countries, and so is something that, needs to be defended, and is becoming a focal part of the US-China competition.

Now, what's interesting about the three alongside them being linked, we're also seeing them increasingly compete for capital.

So, Anna talked about, the ways in which some of the big US hyperscaler companies are investing huge amounts in AI. The latest estimate I've seen is in excess of $1.3 trillion next year. Why is that significant? Well, previously, a lot of these companies funded those investments through their own cash flows. Now, we are seeing a growing share of them move into credit markets to help fund that incremental capital need. We have governments increasing their commitments to defense. So, we saw NATO allies, committing around 5% of their GDP to defense spend by 2035.

When you think about what's the portfolio implication, I would say there's a couple of things to consider. So, the first is: How do you want to get exposure to that resilience economy across the three pillars, whether it's AI, defense or energy? Do you want to have that exposure in equities, in credit or in private markets, or across all three?

And then the second critical point to tie it back to markets is, how does that resilience economy fare in different macroeconomic regimes? So, in a world where inflation may be stickier for longer, or rates may be higher, how do those different aspects of the resilience economy fare in that world and what elements of them do you want to lean into in your portfolios?

Oscar Pulido: And Anna, maybe then we can dig in a little bit on some of these sectors. Let's start with energy because, certainly the Iran war has exposed how quickly geopolitics can reverberate through energy markets. Anybody who's putting fuel in a vehicle will have noticed the increase in gas prices. So, what have we learned about the global energy system and where it's headed as a result of this conflict?

Anna Parker: Maybe I'll take your question in two parts. So, the first about what we've learned so far, and I think it's been remarkable to see how resilient the global energy market has actually been amidst record disruption. When the Iran war first broke out, we saw a near immediate displacement of about twenty percent of the world's oil supply and twenty percent of global LNG exports. This led to very well-reasoned concerns that oil could move up to one hundred and fifty, two hundred dollars a barrel. And these concerns proved wrong. So why is that? We saw a series of stabilizers come together in a somewhat unexpected way.

There are three stories to this. The first is in the Middle East where pipelines that were purpose-built for exactly this type of moment, by Saudi Arabia and the UAE, created an immediate bypass to the Strait of Hormuz when it became weaponized. As a result of that bypass, combined with the use of ship-to-ship transfers in the Persian Gulf, we've seen just in recent weeks, the share of Middle Eastern oil exports resume at about ninety-eight percent of the pre-war level. I would say that this is vulnerable, this is a point in time, but it's a pretty remarkable story around resilience.

The second story is a global one. After the conflict, started, the International Energy Administration organized and coordinated a historic drawdown of strategic stockpiles. This was the largest coordinated release in history. and as part of that, the United States pulled down its Strategic Petroleum Reserve, which enabled it to release additional barrels of oil into the global market. When the conflict began, the global market was already quite well-supplied, so of a global liquidity and resilience story as well.

The third story is I think the most unexpected, and that is what China did to stabilize the market. We saw China significantly draw back its oil imports during the conflict. From the time the conflict began to about June, that was a fifty percent reduction in oil imports for a major, oil consumer. I think there are debates about whether this was a strategic decision by China, or one that is more circumstantial, but the result is that China had significant energy reserves going into the conflict and they primed their domestic economy, through a switch over to electrification, and a push towards electrification over the last decades. This was a surprise toa lot of observers, including energy experts. I would offer a couple caveats though. The first being that some of these buffers, that have existed in the system and prevented a worst-case scenario, are beginning to draw down. And the second thing is that we see the renewed risk of conflict escalation, putting some of those bypass routes in jeopardy. And we've certainly seen resilience in the crude market not translate evenly to the refined product markets, which is why, we see gasoline prices, diesel, and jet fuel under historic strain.

Oscar Pulido: Right. So, what you're saying is that even with the disruption in the Middle East, what many people might not realize is maybe how much worse it could have been.

Anna Parker: Correct. Energy security is this big piece of the resilience economy story.

So, if you look back at history, all of these buffers in the system were created in response to prior crises and shocks. The 1970s and the Arab oil embargo, and the shocks that resulted from that, those shocks brought us the creation of the International Energy Administration and more international coordination.

They brought the creation of strategic reserves and that coordination function that comes with drawing those down. And then even beyond the Middle East, war in Ukraine prompted the Europeans to think a lot more about diversifying their energy markets as a result of being cut off from Russian gas.

And I think the question is what investments we're going to see right now, that are going to be made to create yet more resilience to future shocks. think this could look like a few things. certainly, diversification of routes. We're already seeing major investments announced around pipeline facilities, in the Middle East and connecting those closer to key markets. We're seeing expansion of building out storage capacity that's closer to customers downstream, and I also think we're going to see a major conversation about diversification of energy sources.

This is mostly about optionality, much more so than energy independence writ large and this is even more important amidst the kind of historic demands on power that we're seeing as a result of the AI infrastructure build-out.

Oscar Pulido: Yasmin, maybe I could come back to you because you also mentioned the defense sector as one of the themes here that we need to be paying attention to. In fact, your team recently returned from a space and defense tour, meaning that you were meeting with companies. What were some of the takeaways from that tour?

Yasmin Meissner: So, Anna talked a little bit about the Iran conflict and the implications of that from an energy perspective. There was a CBO study that came out recently which said up to two-thirds of the US Patriot interceptors have now been used during the course of this conflict. So as a reminder, these interceptors are used to defend against the likes of drones or missiles. The drones in question are very cheap to produce, so in the region of 50K. but the Patriot interceptors are pretty expensive to produce, in the range of $5 million, and have very long lead times, in some cases more than two years. And so that already tees us up for a particular challenge that the military is facing in terms of how do you commit that capital? How do you replenish those stockpiles that we've seen get drawn down over the last few months? there are a number of companies that are really focused on solving some of these problems, and I would say that our team came back, incredibly energized and excited about the pace of innovation that they saw.

 I talked about the challenges around, drone technology, you're trying to defend against low-cost, high-volume drones. one of the companies that they met, produces counter-drone technology by using, microwave fields. So, the idea is you create an interference field, you can protect against a drone swarm. It's a completely different way of thinking about defending against, drones as an example.

 A lot of these companies are very focused on making their manufacturing simple and scalable. In some cases, they're even bringing their full supply chain in-house so that they have total end-to-end control. It matters because as technology evolves incredibly quickly, we need to have supply chains that are flexible, robust to sustain munitions through time in any kind of conflict. Ukraine is really good at this. Ukraine can produce up to eight million drones annually. They also have a six-week learning cycle within their kind of battlefield. So, in other words, they adapt very quickly as the technology changes.

The third point is around space. Space is another frontier for defense. SpaceX has had a very important role to play here. It's has brought launch costs down. Why does that matter for the US military? it basically means they can put stuff up in space a lot more cheaply, and a lot more easily. Satellite data as an example, you can use to identify targets. The team at a company called K2 Space, that company, puts really large load satellites up in space. So, a normal satellite, has about two kilowatts of power, that's the equivalent of a kettle. This company is able to put up, 20 kilowatts, so significantly bigger, the reason why I mention it when they get this big, it becomes much harder for adversaries to then jam the data. So, it allows the military to have that kind of reliable and consistent data from space using these really large satellites that gives the US military that edge. The other big takeaway is that the space, use cases are extending way beyond satellites. We're talking about putting interceptors in space or putting in different types of arsenal in space. It's a really exciting and in-innovative area. We're looking at different use cases of technology, establishing that supply chain and ensuring that we have that large capacity to really being able to maintain a conflict through time.

Oscar Pulido: We did talk to Reid Menge recently about the space economy, and so you're touching on, how space is becoming even more relevant to the conversation. Yasmin, the pace of change in this space, no pun intended, is remarkable and you mentioned the Ukrainian government as an example of a government that seems to be able to adapt pretty quickly. How are governments keeping up with the pace of change in the defense sector?

Yasmin Meissner: Yeah. So, I think the US military is a really fascinating example of this. If you think back to how sort of the military was architected before, we lived in a world that was much more driven by hardware. So, you imagine you had a plane, the plane had its own software and its own command control system in it.

Then you had a drone with its own command and control system in it, and then maybe you had a tank and same thing again. So, all of those three things separate and don't necessarily speak the same language or talk to each other. The military is increasingly trying to move towards creating this software that becomes this architecture of their whole military system. So, in other words, you have a single command and control system that speaks the same language, and you slot your hardware modules into it. And that obviously creates a much greater efficiency. It means that the software becomes the brain and the hardware becomes the different body parts, and it allows you to make decisions much more quickly because you can take information from all these different places, put it together, and basically decide on, a list of targets and which one is the most optimal target and move very quickly to execute on that.

Right. It sounds like the suppliers to governments is broadening out. There are more companies making more goods for governments to consume to help with their defense budgets. And you mentioned technology and AI, so that's a good segue, Anna, back to you. You'd mentioned energy, defense, and technology as three themes here.

Oscar Pulido: So, let's talk about technology, and tell me about how you see geopolitics shaping the AI growth story. You talked earlier about the US-China dynamic being very central to the geopolitical story. So, what does technology sovereignty actually mean for geopolitics and for investors?

Anna Parker: I think, again, take this in two parts. The first is about the US and China. So, this is really at the center of the AI growth story and the global AI infrastructure build-out. Both the US and China, believe that AI is going to deliver the defining military and economic advantage of the century, in part for some of the reasons that Yasmin just talked about.

The headline, when you think about US-China AI competition, tends to focus on benchmark model performance- who's ahead and who's behind. But I think that this technology competition really runs the gamut of the full stack, including the race to secure the inputs needed in order to dominate and have reliance within that technology stack. The US and China are both taking steps to protect their own technology stacks and to shore up their advantages and to ensure that no one can infringe upon their advantages, but we see the ways in which the AI supply chain is still really globalized. AI-related hardware shipments last year rose by 40%, and this accounted for a third of global trade growth. McKinsey gives a good example of a data center in the US that is running US frontier models using US-designed chips, but those chips were made in Taiwan, using equipment from the Netherlands, they are paired with high bandwidth memory chips that were made in Korea, packaged and tested in Southeast Asia. maybe they're being powered by turbines from Mexico and wired with copper from Chile. So, we see the kind of globalized nature of the AI supply chain here. So, no country right now is capable of fully building that stack on their own. but even the US and China, with the most advanced AI ecosystems, have significant dependencies that sit outside their borders.

So, I think the real question is whether that interdependence stabilizes the global technology build-out or whether it destabilizes this major economic bet that the world is making around AI. I do want to think a little bit more about what's happening in the rest of the world outside of the US and China because that’s not the only story here.

Rather than joining the race to self-reliance, other countries are thinking about how to ensure the sovereignty and the security of their own technology supply chains. So, you asked about what technology sovereignty actually looks like. To me, this is really about managed interdependence. If you think about AI as critical infrastructure, which it increasingly is, if you're a country, you have to ensure that your critical infrastructure is impervious to threats, that it's reliable in the time of crisis.

 A country can decide that either they want to or they have to rely on foreign technology for models or for chips, but they care a lot about whether compute sits within their own borders, whether sensitive data is allowed to leave the country, and whether they have reliable and guaranteed access to the inputs that they need in the event of crisis.

So, what we see is a layer-by-layer resilience play that's happening. So, countries at the input layer are thinking about and doubling down on areas where they have advantages. Whether that's critical minerals, whether that's energy, or perhaps memory chips as examples of those other choke point advantages in that globalized supply chain. At the model layer, countries are increasingly cultivating their own national champion AI labs. We see this with Cohere in Canada, Mistral in France, G42 in the UAE, and the like. At the compute layer, a major expansion of data centers is happening outside the US and China. We see super-fast growth in data center markets in Southeast Asia, with Malaysia projected to quadruple its data center construction just in the next two years. These are examples of the ways in which we see a really dynamic conversation and evolving around AI technology sovereignty globally.

Oscar Pulido: And I like that term that you used, managed interdependence, which, sounds like countries don't have access to all parts of the stack or all of the inputs that go into having the technological sovereignty. But

Yasmin, when talking to Anna a little bit earlier, she used the word choke point. And so, what is that next strategic choke point that we should be paying attention to?

Yasmin Meissner: It's interesting, we talked about the resilience economy, we talked about these three pillars across AI, defense, and energy, and I think it's worth being aware of exactly that question, Oscar, what are those choke points and what's the implication for investors?

So, one example would be rare earths. China mines around 60% of the world's rare earths and refines a little more than 90% of the world's rare earths. Rare earths go into magnets. Magnets in turn have a range of important uses. From a defense perspective, they matter because they go into fighter jets. from an AI perspective, as Anna said, they matter because they go into, say, data centers. So, they are strategically important, and what you have seen are countries like the US, trying to partner with the likes of Australia and Japan to move away from relying as much on China by building out their own domestic supply chain, both from a mining and refining perspective.

What's really interesting is you see, for example, the US even being willing to set a price floor that's more than double the market price, to really try to encourage domestic producers to start mining in this space. So that's an area of strategic weakness for the rest of the world and an area of strength for China.

On semiconductors, the reality is Taiwan produces more than 90% of the world's semiconductors and sits in a geopolitical hotspot. When we move towards a world that's increasingly characterized by autonomous weapons and AI, clearly having access to advanced computational power and being able to replenish stockpiles through time becomes incredibly important. Clearly, China uses rare earths as a point of leverage, but you've also seen the US use semis as a point of leverage in their relationship with China.

And then the last example I'd give on the energy side, countries increasingly attacking energy infrastructure as a way, again, to exploit their adversaries. Ukraine, in the first eight months of 2026, a Russian refinery was attacked once every three days.

So, the point is that different countries identify these areas of strategic weakness and choose to exploit them. And so, I certainly think each of those three are, from an investment perspective, incredibly important to track, not only how the US-China relationship evolves, but also how access to these supply chains evolve through time because they certainly have the capability to really impact energy security, ability to operate AI, but also, the future world of defense as well.

Oscar Pulido: I'm thinking back to where we started, Anna, we said oftentimes we look at the headlines, we think about the short-term impact on markets, volatility, and what should I be doing in my portfolio for the short term when these headlines hit? And really my reflection is that this probably has more strategic implications for investor portfolios in terms of how they're allocating, what part of the world they're allocating and the sorts of risk that they're taking.

So, thanks for helping us look beyond the short-term headlines and really understand the implications that geopolitics is having on things like energy, defense technology. This seems like it's going to be a story that is, going to continue to develop, so we look forward to having you back. thanks for sharing these insights, and thanks for doing it here on The Bid

Anna Parker: Thanks so much, Oscar

Yasmin Meissner: Thanks for having us.

Oscar Pulido: thanks for listening to this episode of The Bid. If you enjoyed this conversation, check out my discussion with Rolf Heitmeyer, where we explore the surge in global defense spending and why defense investing is moving from the margins to the center of capital markets. Don't forget to subscribe to The Bid wherever you get your podcasts.

<<SPOKEN DISCLOSURES>>

This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to the names of each company mentioned is merely for explaining the investment strategy and should not be construed as investment advice or recommendation. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures

MKTG1026-H-5995734

275. How Geopolitics Is Redefining Defense, Energy, Technology and Global Markets

Web title: How Geopolitics Is Redefining Defense, Energy, Technology and Global Markets

Geopolitical tensions are increasingly reshaping the global economy. Defense spending is rising, energy security has returned to the policy agenda, and competition over artificial intelligence and critical technologies is becoming an increasingly important part of national security. At the same time, conflicts and supply chain disruptions are exposing vulnerabilities in an interconnected global system.

In this episode of The Bid, host Oscar Pulido speaks with Anna Parker, part of the Geopolitical Research and Strategy team at BlackRock, and Yasmin Meissner, portfolio manager for Thematic Strategies at BlackRock. Together, they look beyond short-term geopolitical headlines to explore what BlackRock calls the resilience economy—the growing focus on strengthening security and reducing strategic dependencies across energy, defense and technology.

Anna examines how geopolitical shocks are changing the global energy system and why countries are investing in greater resilience. Yasmin explores the transformation underway in defense, from autonomous systems and counter-drone technology to software and space. They also discuss the geopolitical competition surrounding AI, the push for technology sovereignty, and why strategic choke points including rare earths, semiconductors and energy infrastructure could have increasingly important implications for global markets.

Key insights

Why geopolitical fragmentation is reshaping the global economy and increasing the focus on resilience.
How energy security is evolving as countries respond to geopolitical shocks and vulnerabilities in global supply.
Why defense technology is changing, from autonomous systems and counter-drone capabilities to software and space.
How AI is becoming part of geopolitical competition and driving greater focus on technology sovereignty.
Where strategic choke points are emerging across rare earths, semiconductors and energy infrastructure.
What the resilience economy could mean for investors as capital flows toward energy, defense and technology.

Keywords: geopolitics, defense investing, energy security, artificial intelligence, geopolitical fragmentation, resilience economy, technology sovereignty, global markets

Sources: We can buy more weapons. We can’t buy more time, Defense One, 2026; Anduril, Department of War Sign Production Agreement for Surface-Launched Barracuda-500M, Anduril, 2026; Background Briefing on FY 2026 Defense Budget, U.S. Department of War, 2025; FY 2027 Defense Space Budget: Dramatic and Targeted Growth, Center for Space Policy and Strategy, The Aerospace Corporation, 2026; Technological Evolution on the Battlefield, Center for Strategic and International Studies (CSIS), 2025; Results of Ukraine’s Defense Industry in 2025: FPV Drones, National Security and Defense Council of Ukraine, 2026; Leonidas High-Power Microwave: Directed Energy for cUAS, cUAS Swarms, Counter Electronics, Epirus; Estimating the Cost of Combat Operations Against Iran, Congressional Budget Office, 2026; Global Data Centre Outlook 2026-50: Malaysia Key Findings, PwC, 2026; Cloud Computing, European Commission, 2026; Oil markets strain to plug the gap left by Middle East supply shortfall, International Energy Agency (IEA), 2026; IEA Member countries to carry out largest ever oil stock release amid market disruptions from Middle East conflict, International Energy Agency (IEA), 2026; Middle East Crude Oil Exports Back at Prewar Levels, Analysts Say, The Wall Street Journal, 2026; Why oil prices haven’t gone crazy despite 5 months of US-Iran war, Reuters, 2026; Sheltering from Oil Shocks: Measures to Reduce Impacts on Households and Businesses, International Energy Agency (IEA), 2026; Trends in World Military Expenditure, 2025, Stockholm International Peace Research Institute (SIPRI), 2026; Impacts of Middle East conflict set to reshape energy investment plans as disruptions put focus on security, International Energy Agency (IEA), 2026.

Written Disclosures In Episode Description:

This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to any company or investment strategy mentioned is for illustrative purposes only and not investment advice. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures.

<<TRANSCRIPT>>

Oscar Pulido: Geopolitical tensions are increasingly reshaping the global economy. Defense spending is rising, energy security has moved back up the policy agenda, and competition over artificial intelligence and critical technologies is becoming an important part of national security. At the same time, conflicts and supply chain disruptions are exposing just how interconnected, and in some cases vulnerable, the global system has become. So, what does this changing geopolitical landscape mean for markets and investors?

Welcome to the Bid, where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Pulido.

Today I'm joined by Anna Parker, part of the Geopolitical Research and Strategy team at BlackRock, and Yasmin Meissner, portfolio manager for Thematic Strategies at BlackRock. Together, we'll look beyond the geopolitical headlines and explore how a greater focus on national security and resilience is reshaping defense, energy, and technology. We'll discuss what these shifts could mean for markets, how the defense landscape is evolving, and the strategic vulnerabilities and choke points investors should be watching

Anna and Yasmin, thank you so much for joining us on The Bid.

Anna Parker: Thank you so much for having us, Oscar. It's amazing to be here.

Yasmin Meissner: Thanks for having us. Looking forward to a good discussion

Oscar Pulido: Well, it's great to have you both on. We're going to talk about geopolitics, and it's worth remembering that the BlackRock Investment Institute a couple of years ago talked about a number of different mega forces, one of those was geopolitical fragmentation. And a mega force really is meant to describe a structural theme that we think is going to be present in markets for many years to come. So, it's fair to say that there's a lot of noise going on right now with respect to geopolitics. And Anna, if I could start with you, when you step back from the headlines, what's the bigger story that investors should focus on?

Anna Parker: So, I think you're right that the headlines tend to focus on volatility, shock, churn, chaos in the environment. But that's really not the most important theme for investors to focus on, and certainly not for long-term investors. What I think actually is the most important theme here is around the way that the global economy is rewiring to focus more on resilience. That's happening as a result of geopolitical competition, fragmentation, and a series of shocks.

So, if you break down what's happening, I would say the first thing is that competition between the US and China is accelerating and intensifying, and that's particularly true around AI. We see this as a structural and durable fact about the world, and one that extends well beyond this period of stability in the US-China relationship that we're in right now.

The second thing I would say is about fragmentation. You mentioned that BlackRock's Investment Institute sees geopolitical fragmentation as an important theme, shaping the global economy. That remains true. When we coined that term, we did so to talk about the world organizing itself as a result of US-China competition into different blocs. And what we're seeing right now is actually yet another round of fragmentation that's happening as a result of the US moving to reset its relationships geopolitically and economically with the rest of the world.

The other thing is the Iran war, right? This is the latest in a series of shocks, but fundamentally disruptive to the global economy. And it's the latest on top of a variety of other shocks that we've seen over the last five years: record inflation, trade disruption, the COVID pandemic, Russia's invasion of Ukraine,

 So, competition, fragmentation, shocks, they're all coming together to do a few things for us. First is exposing the vulnerabilities in the global economy that stem from dependency and the ways that those dependencies can become weaponized in times of geopolitical conflict or stress.

We've seen two examples of that in the last two years. The first was the emergence of a choke point in the technology supply chain around critical minerals and rare earths. And the second is a physical choke point in the global energy market at the Strait of Hormuz during the Iran war.

What countries are doing in response to this is thinking about what are their dependencies that they can de-risk, and what are those that are not going to be tolerable over time. We're seeing, major investments to reduce dependencies in strategic sectors. Certainly energy, defense, technology. this is the global resilience economy, on energy, we see a huge amount of investment going towards energy security. On defense, global defense spending increased significantly for the last 11 years in a row. And we're up about forty percent just over the last decade. On technology, obviously, this is the largest Capex cycle that we've seen in history. A lot of that is animated and shaped by competition between the US and China, but also the desire for countries in between them to pursue technology sovereignty.

Right. When we talk about geopolitics, I think we often think about the latest conflict that's in the headlines and the short-term impact on markets.

Oscar Pulido: And Anna, what you've helped us do is zoom out and really think about this more strategically. So, there is a lot to unpack here. And Yasmine, maybe I could come to you. if you're an investor, what does all of this mean for markets, and how are you seeing it from your seat?

Yasmin Meissner:

So, Anna introduced this idea of the resilience economy across three core pillars. That's energy, defense, and AI. The three are linked to each other. AI needs power, any country that's thinking seriously about its defense strategy is going to care an awful lot about its energy security. Defense increasingly is being characterized by technology, so think of autonomous weapons. And then AI, as Anna said, is becoming a strategic asset for countries, and so is something that, needs to be defended, and is becoming a focal part of the US-China competition.

Now, what's interesting about the three alongside them being linked, we're also seeing them increasingly compete for capital.

So, Anna talked about, the ways in which some of the big US hyperscaler companies are investing huge amounts in AI. The latest estimate I've seen is in excess of $1.3 trillion next year. Why is that significant? Well, previously, a lot of these companies funded those investments through their own cash flows. Now, we are seeing a growing share of them move into credit markets to help fund that incremental capital need. We have governments increasing their commitments to defense. So, we saw NATO allies, committing around 5% of their GDP to defense spend by 2035.

When you think about what's the portfolio implication, I would say there's a couple of things to consider. So, the first is: How do you want to get exposure to that resilience economy across the three pillars, whether it's AI, defense or energy? Do you want to have that exposure in equities, in credit or in private markets, or across all three?

And then the second critical point to tie it back to markets is, how does that resilience economy fare in different macroeconomic regimes? So, in a world where inflation may be stickier for longer, or rates may be higher, how do those different aspects of the resilience economy fare in that world and what elements of them do you want to lean into in your portfolios?

Oscar Pulido: And Anna, maybe then we can dig in a little bit on some of these sectors. Let's start with energy because, certainly the Iran war has exposed how quickly geopolitics can reverberate through energy markets. Anybody who's putting fuel in a vehicle will have noticed the increase in gas prices. So, what have we learned about the global energy system and where it's headed as a result of this conflict?

Anna Parker: Maybe I'll take your question in two parts. So, the first about what we've learned so far, and I think it's been remarkable to see how resilient the global energy market has actually been amidst record disruption. When the Iran war first broke out, we saw a near immediate displacement of about twenty percent of the world's oil supply and twenty percent of global LNG exports. This led to very well-reasoned concerns that oil could move up to one hundred and fifty, two hundred dollars a barrel. And these concerns proved wrong. So why is that? We saw a series of stabilizers come together in a somewhat unexpected way.

There are three stories to this. The first is in the Middle East where pipelines that were purpose-built for exactly this type of moment, by Saudi Arabia and the UAE, created an immediate bypass to the Strait of Hormuz when it became weaponized. As a result of that bypass, combined with the use of ship-to-ship transfers in the Persian Gulf, we've seen just in recent weeks, the share of Middle Eastern oil exports resume at about ninety-eight percent of the pre-war level. I would say that this is vulnerable, this is a point in time, but it's a pretty remarkable story around resilience.

The second story is a global one. After the conflict, started, the International Energy Administration organized and coordinated a historic drawdown of strategic stockpiles. This was the largest coordinated release in history. and as part of that, the United States pulled down its Strategic Petroleum Reserve, which enabled it to release additional barrels of oil into the global market. When the conflict began, the global market was already quite well-supplied, so of a global liquidity and resilience story as well.

The third story is I think the most unexpected, and that is what China did to stabilize the market. We saw China significantly draw back its oil imports during the conflict. From the time the conflict began to about June, that was a fifty percent reduction in oil imports for a major, oil consumer. I think there are debates about whether this was a strategic decision by China, or one that is more circumstantial, but the result is that China had significant energy reserves going into the conflict and they primed their domestic economy, through a switch over to electrification, and a push towards electrification over the last decades. This was a surprise toa lot of observers, including energy experts. I would offer a couple caveats though. The first being that some of these buffers, that have existed in the system and prevented a worst-case scenario, are beginning to draw down. And the second thing is that we see the renewed risk of conflict escalation, putting some of those bypass routes in jeopardy. And we've certainly seen resilience in the crude market not translate evenly to the refined product markets, which is why, we see gasoline prices, diesel, and jet fuel under historic strain.

Oscar Pulido: Right. So, what you're saying is that even with the disruption in the Middle East, what many people might not realize is maybe how much worse it could have been.

Anna Parker: Correct. Energy security is this big piece of the resilience economy story.

So, if you look back at history, all of these buffers in the system were created in response to prior crises and shocks. The 1970s and the Arab oil embargo, and the shocks that resulted from that, those shocks brought us the creation of the International Energy Administration and more international coordination.

They brought the creation of strategic reserves and that coordination function that comes with drawing those down. And then even beyond the Middle East, war in Ukraine prompted the Europeans to think a lot more about diversifying their energy markets as a result of being cut off from Russian gas.

And I think the question is what investments we're going to see right now, that are going to be made to create yet more resilience to future shocks. think this could look like a few things. certainly, diversification of routes. We're already seeing major investments announced around pipeline facilities, in the Middle East and connecting those closer to key markets. We're seeing expansion of building out storage capacity that's closer to customers downstream, and I also think we're going to see a major conversation about diversification of energy sources.

This is mostly about optionality, much more so than energy independence writ large and this is even more important amidst the kind of historic demands on power that we're seeing as a result of the AI infrastructure build-out.

Oscar Pulido: Yasmin, maybe I could come back to you because you also mentioned the defense sector as one of the themes here that we need to be paying attention to. In fact, your team recently returned from a space and defense tour, meaning that you were meeting with companies. What were some of the takeaways from that tour?

Yasmin Meissner: So, Anna talked a little bit about the Iran conflict and the implications of that from an energy perspective. There was a CBO study that came out recently which said up to two-thirds of the US Patriot interceptors have now been used during the course of this conflict. So as a reminder, these interceptors are used to defend against the likes of drones or missiles. The drones in question are very cheap to produce, so in the region of 50K. but the Patriot interceptors are pretty expensive to produce, in the range of $5 million, and have very long lead times, in some cases more than two years. And so that already tees us up for a particular challenge that the military is facing in terms of how do you commit that capital? How do you replenish those stockpiles that we've seen get drawn down over the last few months? there are a number of companies that are really focused on solving some of these problems, and I would say that our team came back, incredibly energized and excited about the pace of innovation that they saw.

 I talked about the challenges around, drone technology, you're trying to defend against low-cost, high-volume drones. one of the companies that they met, produces counter-drone technology by using, microwave fields. So, the idea is you create an interference field, you can protect against a drone swarm. It's a completely different way of thinking about defending against, drones as an example.

 A lot of these companies are very focused on making their manufacturing simple and scalable. In some cases, they're even bringing their full supply chain in-house so that they have total end-to-end control. It matters because as technology evolves incredibly quickly, we need to have supply chains that are flexible, robust to sustain munitions through time in any kind of conflict. Ukraine is really good at this. Ukraine can produce up to eight million drones annually. They also have a six-week learning cycle within their kind of battlefield. So, in other words, they adapt very quickly as the technology changes.

The third point is around space. Space is another frontier for defense. SpaceX has had a very important role to play here. It's has brought launch costs down. Why does that matter for the US military? it basically means they can put stuff up in space a lot more cheaply, and a lot more easily. Satellite data as an example, you can use to identify targets. The team at a company called K2 Space, that company, puts really large load satellites up in space. So, a normal satellite, has about two kilowatts of power, that's the equivalent of a kettle. This company is able to put up, 20 kilowatts, so significantly bigger, the reason why I mention it when they get this big, it becomes much harder for adversaries to then jam the data. So, it allows the military to have that kind of reliable and consistent data from space using these really large satellites that gives the US military that edge. The other big takeaway is that the space, use cases are extending way beyond satellites. We're talking about putting interceptors in space or putting in different types of arsenal in space. It's a really exciting and in-innovative area. We're looking at different use cases of technology, establishing that supply chain and ensuring that we have that large capacity to really being able to maintain a conflict through time.

Oscar Pulido: We did talk to Reid Menge recently about the space economy, and so you're touching on, how space is becoming even more relevant to the conversation. Yasmin, the pace of change in this space, no pun intended, is remarkable and you mentioned the Ukrainian government as an example of a government that seems to be able to adapt pretty quickly. How are governments keeping up with the pace of change in the defense sector?

Yasmin Meissner: Yeah. So, I think the US military is a really fascinating example of this. If you think back to how sort of the military was architected before, we lived in a world that was much more driven by hardware. So, you imagine you had a plane, the plane had its own software and its own command control system in it.

Then you had a drone with its own command and control system in it, and then maybe you had a tank and same thing again. So, all of those three things separate and don't necessarily speak the same language or talk to each other. The military is increasingly trying to move towards creating this software that becomes this architecture of their whole military system. So, in other words, you have a single command and control system that speaks the same language, and you slot your hardware modules into it. And that obviously creates a much greater efficiency. It means that the software becomes the brain and the hardware becomes the different body parts, and it allows you to make decisions much more quickly because you can take information from all these different places, put it together, and basically decide on, a list of targets and which one is the most optimal target and move very quickly to execute on that.

Right. It sounds like the suppliers to governments is broadening out. There are more companies making more goods for governments to consume to help with their defense budgets. And you mentioned technology and AI, so that's a good segue, Anna, back to you. You'd mentioned energy, defense, and technology as three themes here.

Oscar Pulido: So, let's talk about technology, and tell me about how you see geopolitics shaping the AI growth story. You talked earlier about the US-China dynamic being very central to the geopolitical story. So, what does technology sovereignty actually mean for geopolitics and for investors?

Anna Parker: I think, again, take this in two parts. The first is about the US and China. So, this is really at the center of the AI growth story and the global AI infrastructure build-out. Both the US and China, believe that AI is going to deliver the defining military and economic advantage of the century, in part for some of the reasons that Yasmin just talked about.

The headline, when you think about US-China AI competition, tends to focus on benchmark model performance- who's ahead and who's behind. But I think that this technology competition really runs the gamut of the full stack, including the race to secure the inputs needed in order to dominate and have reliance within that technology stack. The US and China are both taking steps to protect their own technology stacks and to shore up their advantages and to ensure that no one can infringe upon their advantages, but we see the ways in which the AI supply chain is still really globalized. AI-related hardware shipments last year rose by 40%, and this accounted for a third of global trade growth. McKinsey gives a good example of a data center in the US that is running US frontier models using US-designed chips, but those chips were made in Taiwan, using equipment from the Netherlands, they are paired with high bandwidth memory chips that were made in Korea, packaged and tested in Southeast Asia. maybe they're being powered by turbines from Mexico and wired with copper from Chile. So, we see the kind of globalized nature of the AI supply chain here. So, no country right now is capable of fully building that stack on their own. but even the US and China, with the most advanced AI ecosystems, have significant dependencies that sit outside their borders.

So, I think the real question is whether that interdependence stabilizes the global technology build-out or whether it destabilizes this major economic bet that the world is making around AI. I do want to think a little bit more about what's happening in the rest of the world outside of the US and China because that’s not the only story here.

Rather than joining the race to self-reliance, other countries are thinking about how to ensure the sovereignty and the security of their own technology supply chains. So, you asked about what technology sovereignty actually looks like. To me, this is really about managed interdependence. If you think about AI as critical infrastructure, which it increasingly is, if you're a country, you have to ensure that your critical infrastructure is impervious to threats, that it's reliable in the time of crisis.

 A country can decide that either they want to or they have to rely on foreign technology for models or for chips, but they care a lot about whether compute sits within their own borders, whether sensitive data is allowed to leave the country, and whether they have reliable and guaranteed access to the inputs that they need in the event of crisis.

So, what we see is a layer-by-layer resilience play that's happening. So, countries at the input layer are thinking about and doubling down on areas where they have advantages. Whether that's critical minerals, whether that's energy, or perhaps memory chips as examples of those other choke point advantages in that globalized supply chain. At the model layer, countries are increasingly cultivating their own national champion AI labs. We see this with Cohere in Canada, Mistral in France, G42 in the UAE, and the like. At the compute layer, a major expansion of data centers is happening outside the US and China. We see super-fast growth in data center markets in Southeast Asia, with Malaysia projected to quadruple its data center construction just in the next two years. These are examples of the ways in which we see a really dynamic conversation and evolving around AI technology sovereignty globally.

Oscar Pulido: And I like that term that you used, managed interdependence, which, sounds like countries don't have access to all parts of the stack or all of the inputs that go into having the technological sovereignty. But

Yasmin, when talking to Anna a little bit earlier, she used the word choke point. And so, what is that next strategic choke point that we should be paying attention to?

Yasmin Meissner: It's interesting, we talked about the resilience economy, we talked about these three pillars across AI, defense, and energy, and I think it's worth being aware of exactly that question, Oscar, what are those choke points and what's the implication for investors?

So, one example would be rare earths. China mines around 60% of the world's rare earths and refines a little more than 90% of the world's rare earths. Rare earths go into magnets. Magnets in turn have a range of important uses. From a defense perspective, they matter because they go into fighter jets. from an AI perspective, as Anna said, they matter because they go into, say, data centers. So, they are strategically important, and what you have seen are countries like the US, trying to partner with the likes of Australia and Japan to move away from relying as much on China by building out their own domestic supply chain, both from a mining and refining perspective.

What's really interesting is you see, for example, the US even being willing to set a price floor that's more than double the market price, to really try to encourage domestic producers to start mining in this space. So that's an area of strategic weakness for the rest of the world and an area of strength for China.

On semiconductors, the reality is Taiwan produces more than 90% of the world's semiconductors and sits in a geopolitical hotspot. When we move towards a world that's increasingly characterized by autonomous weapons and AI, clearly having access to advanced computational power and being able to replenish stockpiles through time becomes incredibly important. Clearly, China uses rare earths as a point of leverage, but you've also seen the US use semis as a point of leverage in their relationship with China.

And then the last example I'd give on the energy side, countries increasingly attacking energy infrastructure as a way, again, to exploit their adversaries. Ukraine, in the first eight months of 2026, a Russian refinery was attacked once every three days.

So, the point is that different countries identify these areas of strategic weakness and choose to exploit them. And so, I certainly think each of those three are, from an investment perspective, incredibly important to track, not only how the US-China relationship evolves, but also how access to these supply chains evolve through time because they certainly have the capability to really impact energy security, ability to operate AI, but also, the future world of defense as well.

Oscar Pulido: I'm thinking back to where we started, Anna, we said oftentimes we look at the headlines, we think about the short-term impact on markets, volatility, and what should I be doing in my portfolio for the short term when these headlines hit? And really my reflection is that this probably has more strategic implications for investor portfolios in terms of how they're allocating, what part of the world they're allocating and the sorts of risk that they're taking.

So, thanks for helping us look beyond the short-term headlines and really understand the implications that geopolitics is having on things like energy, defense technology. This seems like it's going to be a story that is, going to continue to develop, so we look forward to having you back. thanks for sharing these insights, and thanks for doing it here on The Bid

Anna Parker: Thanks so much, Oscar

Yasmin Meissner: Thanks for having us.

Oscar Pulido: thanks for listening to this episode of The Bid. If you enjoyed this conversation, check out my discussion with Rolf Heitmeyer, where we explore the surge in global defense spending and why defense investing is moving from the margins to the center of capital markets. Don't forget to subscribe to The Bid wherever you get your podcasts.

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This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to the names of each company mentioned is merely for explaining the investment strategy and should not be construed as investment advice or recommendation. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures

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Who hosts The Bid investment podcast?

Oscar Pulido

Oscar Pulido

Global Head of Product Strategy for Fundamental Equities
Oscar D. Pulido, CFA, Managing Director, is the Global Head of Product Strategy for the Fundamental Equities (FE) business. In this role, he is responsible for commercial strategy, product development, and business activities to drive growth across the FE platform. He is also the host of BlackRock's flagship investment podcast, The Bid.

What topics does The Bid cover?

About The Bid (FAQs)

  • The Bid breaks down what’s happening in the world of investing and explores the forces shaping the economy and financial markets. From market outlooks to geopolitics and technology, it features insights from BlackRock experts and global thought leaders on the trends moving markets.

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  • The Bid is hosted by Oscar Pulido, Managing Director and Global Head of Product Strategy for Fundamental Equities at BlackRock, and produced by Stevie Manns.

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