Powering the Future: The Case for Uranium in Your Portfolio

With the worst of the trade war likely in the rearview for financial markets, attention has now turned to rising geopolitical tensions in the Middle East. Oil prices spiked on the back of Israeli airstrikes under “Operation Rising Lion” that targeted Iranian nuclear infrastructure and oil and gas facilities. They look to remain elevated as the United States has directly entered the conflict by bombing uranium enrichment sites in Iran on Saturday. While oil and petroleum product export flows haven’t been materially affected as of yet, market participants will be intensely focused on whether Iran will respond by closing the Strait of Hormuz, disrupting the passage that handles about a quarter of the world oil trade. Bloomberg Economics estimates that if the Strait is closed, crude prices may rise to $130 as supply disruptions send buyers scrambling to secure supply. The potential for a closure of the Strait remains a risk for global trade and commodity markets, yet shutting down the shipping lane will also affect the ability of Iran to ship oil to China, so it is not clear what the next steps for the Iranian leadership will be.

Equity markets, up until now, have remained relatively calm—mirroring 2024, when strikes between Israel and Iran faded after initial flare-ups. Initial reports are that the U.S. strikes did not completely destroy Iran’s stock of highly enriched uranium stored at the Isfahan facility, so depending on Iran’s response to the attacks, geopolitical risk premium in energy markets could remain elevated in the short term. The overarching worries are not so much about long-term supply of oil, given the OPEC+ alliance has almost six million barrels per day of spare capacity. The larger worry is the viability of transportation routes and the potential for Iran’s response to include targeting oil infrastructure of U.S. allies in the region.

Amid rising tensions and renewed diplomatic complexity, uranium prices have quietly begun to recover. Since bottoming in March, front-month uranium futures have rallied 18%, though they remain about 30% below late 2023 highs. The fundamental setup for uranium points to a bullish outlook: long-term demand is rising while supply remains constrained.

This supply-demand imbalance isn’t unique to uranium, but it’s especially pronounced in this market. Decades of underinvestment, long permitting timelines, and historically low prices have discouraged new supply. Meanwhile, nuclear energy is undergoing a resurgence. The International Energy Agency (IEA) expects electricity to rise from 20% of final energy consumption today to over 50% by 2050. In absolute terms, electricity demand is forecast to at least double by mid-century, with the Stated Policies Scenario (STEPS) from the IEA calling for a 75% increase. In the short term, the IEA is forecasting 4% annualized growth for electricity consumption over the next three years—driven largely by China, which accounts for more than half of the projected near-term increase.

Nuclear power is well-positioned to capitalize on this growth. Its low emissions profile and ability to provide dense, stable baseload power for decades make it a prime candidate for a more electrified world. The IEA projects nuclear generation will hit a record high in 2025, thanks to new reactors coming online in China, India, and Korea, and a rebound in output from France and Japan. China alone has 30 reactors under construction—roughly half the global total. Under STEPS, the IEA is forecasting an increase in nuclear power generation investment to $70 billion per year by 2030, with nuclear capacity on track to rise by more than 50% by 2050.

Because of its long lifespan and its dense power generation, the energy return on investment (EROI) is superior to other renewable energy sources such as wind and solar. The energy efficiency and low carbon footprint have been drawing new attention from the private sector. Major tech companies are recognizing the benefits of long-duration, low-carbon power as they race to support energy-intensive AI infrastructure. Microsoft has signed a 20-year deal to restart Three Mile Island, while Meta has secured a long-term agreement to source nuclear power from Constellation’s Clean Energy Center. In parallel, the U.S. government has issued executive orders in 2025 prioritizing domestic uranium mining, enrichment, and next-generation reactor development, while exempting raw uranium from tariffs to safeguard fuel supply for existing reactors.

Despite rising demand, uranium supply remains tight. The World Nuclear Association notes that in 2022, primary mine output met just 74% of global demand. Stockpiles have filled the gap, but those inventories—built during the last decade of low prices—are being drawn down. The Red Book nuclear report from the OECD suggests that under a high-demand scenario, a production shortfall could emerge as early as 2027. Alpine Macro estimates that current demand from the global reactor fleet is around 180 million pounds annually, while mine production hovers between 135–140 million pounds, implying a deficit of 20–45 million pounds per year—and that’s before factoring in the 63 reactors currently under construction. If small modular reactors (SMRs) gain traction, demand could rise even faster. Unlike other energy feedstocks like coal or natural gas, nuclear is not easily scalable in the short term. New mines can take 10–15 years to come online, meaning today’s price signals are critical for incentivizing future supply.

What makes uranium particularly interesting from an investment perspective is its extreme price inelasticity. Uranium typically accounts for just 5–10% of a nuclear plant’s total cost of electricity. Even a doubling in uranium prices has a minimal effect on overall generation costs. Utilities run reactors based on output needs, not market prices, and they tend to lock in long-term supply contracts. That makes demand relatively fixed—regardless of price spikes.

On the other hand, higher spot prices do incentivize new production. As prices recover, mothballed mines may restart, and new projects could finally reach a final investment decision. Still, these responses take time, offering investors a window to capitalize on structural tightness.

Including uranium in a diversified commodity portfolio offers compelling benefits driven by its unique supply-demand dynamics, strategic role in the global energy transition, and low correlation with other commodities. As a feedstock for nuclear power, uranium is highly price inelastic, meaning demand remains stable regardless of market volatility, providing defensive characteristics in a portfolio. With nuclear energy gaining momentum as a scalable, low-emission baseload power source—particularly amid rising electricity demand from AI-driven datacenters and electrification—uranium stands to benefit from structural demand growth. At the same time, years of underinvestment and long lead times for new mining projects have created a constrained supply backdrop, reinforcing a bullish long-term outlook. Uranium’s exposure to a distinct set of geopolitical, regulatory, and technological factors also offers diversification benefits compared to traditional energy commodities like oil or gas, making it a valuable addition for investors seeking both resilience and asymmetric upside.

In an era defined by energy transition and rising electricity demand, uranium’s role is becoming harder to ignore. For investors seeking differentiated exposure with strong long-term tailwinds, the case for including uranium is certainly growing stronger.

Happy investing!

Scott Smith
Chief Investment Officer