Chartered Financial Analyst Level 2

Explanation

Geopolitical events primarily influence the flow of energy commodities because:

• Energy commodities (such as oil, natural gas, and coal) are heavily influenced by geopolitical factors including:

  • Political instability in major producing regions (e.g., Middle East, Russia)
  • Trade sanctions and embargoes
  • Military conflicts affecting production and transportation
  • OPEC decisions and production quotas

• Livestock commodities are more influenced by factors like:

  • Weather conditions
  • Disease outbreaks
  • Feed costs
  • Consumer demand patterns

• Base material commodities (metals, minerals) are affected by:

  • Industrial demand
  • Mining regulations
  • Environmental policies
  • Economic cycles

Geopolitical events can directly disrupt energy supply chains, production facilities, and transportation routes, making energy commodities the most sensitive to such events among the options provided.