Finimize - 🌎 Another hottest year

What’s going on here?

Crude oil prices jumped to a five-month high on Monday, just days after the US slapped brand-new sanctions on two big Russian producers.

What does this mean?

Russia’s been dodging Western sanctions by offering slick discounts to buyers like India and China, using an aging “shadow fleet” of tankers to bypass restrictions, and blending oil grades to mask where they’re from. But it’s been leaving oily fingerprints everywhere, and the US is on its trail. Aiming to tighten the net, the country’s latest moves might actually also squeeze the world’s supply of oil – potentially enough to erase the surplus that’s expected this year. And with the recent run of colder weather, shrunken US oil stockpiles, and whispers of tougher trade restrictions on Iran, it’s no wonder the price of the benchmark Brent crude has just climbed back above $80 a barrel. Right when nobody wants it to, of course.

Why should I care?

For markets: Prices at the pump.

OPEC+ – the group of oil-producing countries – might eventually open its collective taps wider to calm down prices and keep demand high. But until that happens, higher oil costs will likely stick around. And since energy prices ripple through everything from factories to shipping, that could send inflation bubbling up again.

The bigger picture: The case for diversification.

The inflation surge in 2022 taught investors a harsh lesson: rising consumer prices can whack stocks and bonds at the same time. So if you want to build a solid, resilient portfolio, you might want to broaden its horizons. That could mean adding some commodities like oil – or, at least, stocks or exchange-traded funds linked to them – to your investment mix.

What’s going on here?

Global temperatures broke a troubling record in 2024, rising 1.5°C above pre-industrial levels for the first time.

What does this mean?

It’s bad news: the spike, measured by the Copernicus climate agency, suggests that climate change could be accelerating even faster than experts predicted. But that doesn’t mean the Paris Accord’s long-term objective has been lost: the aim of capping increases at the 1.5°C mark is based on averages over more than two decades. Although, with every year recently coming in hotter than the one before, it’s pretty clear how hard it’ll be for the world to meet that goal. What’s more, research from Copernicus shows that 2024’s floods, heatwaves, and droughts weren’t random – they were linked to rising greenhouse gases like carbon dioxide and methane. And further temperature increases could spark a domino effect of exponentially more severe storms, longer droughts, and deadlier heatwaves.

Why should I care?

The bigger picture: No free ride on climate costs.

Climate change expenses don’t stop with insurers. They trickle down to all kinds of businesses, and regular folk too. The wildfires across Los Angeles are a prime example: JPMorgan estimates the damages will exceed $20 billion. And sure, insurers might bear the initial brunt, but their likely response down the line – hiking premiums or denying coverage in higher-risk markets – means that other businesses and individuals will eventually foot the bill.

For you personally: Small moves, big impact.

Your investments might feel like a drop in the ocean, but they can make a big difference. If you’re concerned about climate issues, you could buy stocks in companies that are driving innovation in the field, or invest in funds that back green businesses. Then, once you own shares, you can use your voice – your vote – to push for sustainability goals. Even switching to a bank that funds environmental projects could help shift the tide. If millions of retail investors take small steps, that can create waves of change.