Climate-Driven Shockwaves Along the Futures Curve
By CSF Research associates: Susana Campos-Martins and Filippo Pellegrino
March 2026
How extreme weather is reshaping global energy markets
From winter storms disrupting gas production in Texas to floods and wildfires affecting infrastructure worldwide, climate-driven disasters are increasingly interfering with how energy is produced, stored, and transported.
Our project asks a central question:
How do localized climate disasters ripple through global energy markets—not just immediately, but across future expectations?
Why commodities matter
Research on climate risk in finance has largely focused on equities, municipal bonds, and real estate. These markets are geographically anchored, making it easier to link asset prices to physical climate exposure.
Commodities, however, are global. Oil and natural gas prices influence inflation, household energy bills, industrial production, and food costs. Yet commodities remain comparatively understudied in climate finance, largely because of data limitations. Production data have traditionally been available only at annual country-level aggregates, making it difficult to match specific climate events to actual production sites.
This project addresses that gap directly.
Building a high-granularity global dataset
At the heart of the project is a new geospatial dataset mapping energy production from the 1970s to today. Moving beyond earlier state-level data, we are constructing county-level and site-level information on:
Production facilities
Storage infrastructure
Transportation hubs
The dataset is assembled through extensive archival research, drawing on government publications, statistical yearbooks, academic studies, and other historical sources. For each year since 1970, we identify the largest producing countries and manually annotate their most productive regions.
We then merge this information with detailed records of climate-driven disasters—including storms, floods, wildfires, and extreme temperatures—using global databases that document more than 23,000 major events.
This bottom-up approach allows us to match actual production volumes, not just general locations, to specific climate shocks. Together, these advances provide a new empirical framework for studying physical climate risk in commodity markets.
Preliminary evidence: high physical exposure
Our early findings reveal a striking level of exposure. In the United States, over 90% of oil and natural gas production sites have been located within 200 kilometers of a recorded climate-driven disaster over a rolling ten-year window.
Storms are the most frequent hazard affecting energy-producing regions. Given their large geographic footprint, even a single severe storm can disrupt substantial production capacity.
We also observe strong seasonal patterns. Price effects are particularly pronounced in spring and autumn—periods associated with more volatile and severe weather systems. These results suggest that climate risk is not only geographically concentrated but also seasonally amplified.
Beyond spot prices: understanding the futures curve
Most studies examine how disasters affect spot prices or the nearest futures contracts. But commodity markets are forward-looking. Contracts with longer maturities reflect expectations about future production, inventories, and structural risk.
A key innovation of this project is examining how climate-driven shocks propagate along the entire futures curve.
Economic theory suggests that when supply becomes scarce, spot prices rise and the value of holding inventories—the convenience yield—also increases. Whether long-dated futures rise or fall depends on the balance between these forces. Do markets treat climate disruptions as temporary shocks, or as signals of deeper structural vulnerability?
Preliminary evidence shows significant correlations between disaster exposure and returns on near-term futures, especially during high-risk seasons. The next stage of the project will extend this analysis to longer maturities to determine how investor expectations adjust.
Why this research matters
The implications are wide-ranging.
For investors, improved measurement of climate exposure can enhance portfolio allocation, hedging strategies, and risk management in commodity-linked assets.
For central banks and policymakers, energy prices are central to inflation dynamics. If climate-driven disruptions increasingly influence futures markets, they may affect inflation expectations and financial stability. Understanding these mechanisms is critical for macroeconomic policy.
For society more broadly, energy underpins modern economies. Disruptions in production can cascade through transportation, manufacturing, and food systems. Quantifying how physical climate events propagate through markets improves our understanding of economic resilience in a warming world.
Looking ahead
Over the coming months, we are expanding the dataset to cover additional major energy producers to capture a larger share of global supply. We are also deepening the empirical analysis using advanced asset-pricing techniques to better understand how markets price climate-related supply risk.
Importantly, the resulting dataset will be made publicly available, enabling replication and further research. By lowering data barriers, we hope to stimulate broader investigation into the intersection of climate risk, commodity markets, and financial stability.
This project will deepen our understanding of how climate-driven physical disruptions become financial shockwaves—and what that means for markets, policymakers, and society at large.
