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package/.claude/skills/market-news-analyst/references/geopolitical_commodity_correlations.md

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+# Geopolitical Events and Commodity Correlations
+
+## Energy Commodities
+
+### Crude Oil (WTI / Brent)
+
+**Middle East Conflicts:**
+
+**Supply Disruption Risk:**
+- Strait of Hormuz tensions: ~20% of global oil supply passes through
+  - Iran tensions: Oil +5-15% immediately
+  - Historical: 2019 Saudi Aramco attacks: Oil +15% in single day
+- Saudi Arabia/UAE production: ~15% of global supply
+  - Instability: Oil rallies sharply
+- Iraq/Libya disruptions: Regional conflicts impact production
+  - Libya civil war: Removed 1M+ barrels/day periodically
+
+**Israel-Palestine Conflicts:**
+- Direct impact minimal (neither major producer)
+- Indirect via regional escalation concerns
+- Safe-haven bid for oil typically +2-5%
+
+**Iranian Tensions:**
+- Nuclear program concerns
+- Sanctions/sanctions relief
+  - Sanctions: Removes ~1-2M barrels/day, oil +10-20%
+  - Sanctions relief: Adds supply, oil -10-15%
+- Proxy conflicts (Yemen, Syria, Lebanon)
+
+**Russia-Ukraine Conflict:**
+
+**Natural Gas:**
+- European dependence on Russian gas (~40% pre-conflict)
+- Nord Stream disruptions: Natural gas prices +300-400% (2022)
+- Coal as alternative: Thermal coal rallied strongly
+- LNG exports from US/Qatar beneficiaries
+
+**Crude Oil:**
+- Russia ~10% of global supply
+- Sanctions impact: Removed ~1M barrels/day from market
+- Oil price: +40% in initial months (2022)
+- Urals discount to Brent widened to $30-40/barrel
+
+**Petroleum Products:**
+- Diesel shortages in Europe (Russia major supplier)
+- Gasoline prices globally impacted
+
+**US-China Tensions:**
+
+**Energy Demand Implications:**
+- Trade war: Chinese growth slowdown concerns, oil -5-10%
+- Taiwan tensions: Regional instability premium, oil +3-7%
+- Technology restrictions: Minimal direct impact on oil
+
+**US-Iran Relations:**
+- Sanctions enforcement cycles
+- Oil supply ~1-2M barrels/day swing factor
+- Price impact: ±10-15% depending on direction
+
+**Venezuela Political Crisis:**
+- Production collapsed from ~3M to ~0.7M barrels/day
+- Sanctions impact
+- Regime change prospects: Oil price sensitive to potential supply return
+
+### Natural Gas
+
+**European Energy Crisis (Russia-Ukraine):**
+- As detailed above, massive impact
+- Coal-to-gas switching reversed
+- Renewables acceleration
+
+**US Production Growth:**
+- Shale revolution reduced geopolitical sensitivity
+- LNG export capacity growth
+- Winter weather events still create volatility
+
+**Asian LNG Markets:**
+- Japan/South Korea/China major importers
+- Competition for LNG cargoes during crises
+- Price spikes in supply disruptions
+
+### Coal
+
+**Russia-Ukraine Conflict:**
+- Russian coal sanctions
+- European utilities switching gas-to-coal
+- Thermal coal prices +200% (2022)
+
+**China-Australia Trade Tensions:**
+- Informal coal import ban (2020-2021)
+- China shifted to Indonesian/Russian coal
+- Australian coal exporters found alternative buyers
+- Metallurgical coal (steel-making) less impacted
+
+**Climate Policy:**
+- Long-term decline narrative
+- Short-term supply tightness from underinvestment
+
+## Precious Metals
+
+### Gold
+
+**Geopolitical Risk Premium:**
+
+**General Pattern:**
+- Conflicts/crises: Gold +2-10% immediate rally
+- Safe-haven flows dominate
+- Negative real rates amplify gains
+
+**Specific Events:**
+
+**Russia-Ukraine Conflict:**
+- Gold rallied from $1,800 to $2,070 (March 2022)
+- Central bank buying increased (dedollarization theme)
+- Physical demand surge
+
+**Middle East Escalations:**
+- Historical: Iraq War (2003): Gold +7%
+- Syria conflicts: Moderate impact (+2-4%)
+- Recent Israel-Gaza: Gold +5-8%
+
+**US-China Tensions:**
+- Gradual safe-haven bid
+- Central bank reserve diversification (China buying gold)
+- Currency war implications
+
+**Banking Crises:**
+- 2008: Gold rallied during acute stress
+- 2023 regional bank failures: Gold +10% in weeks
+- Trust in fiat currency undermined
+
+**Currency Debasement Concerns:**
+- Massive fiscal deficits
+- QE programs
+- Inflation hedging demand
+
+**Interest Rate Interaction:**
+- Geopolitical premium can override rate headwinds
+- Real rates still primary driver long-term
+- Risk-off overrides opportunity cost considerations short-term
+
+### Silver
+
+**Industrial Demand Component:**
+- 50% industrial use (solar, electronics, EVs)
+- Economic slowdown from geopolitics: Negative
+- Green energy push: Positive
+
+**Gold Correlation:**
+- Trades with gold during risk-off (0.7-0.8 correlation)
+- Amplified moves (higher beta to gold)
+
+**Russia-Ukraine Example:**
+- Industrial recession fears limited silver gains vs gold
+- Gold/Silver ratio widened (gold outperformed)
+
+### Platinum/Palladium
+
+**Russian Supply Dominance:**
+- Russia ~40% of palladium supply
+- ~10% of platinum supply
+- Sanctions concerns: Prices spiked 2022
+
+**Automotive Demand:**
+- Catalytic converters
+- EV transition threat long-term
+- Recession fears negative
+
+**South African Supply Risks:**
+- Political instability
+- Power shortages (load-shedding)
+- Mining strikes frequent
+
+## Base Metals
+
+### Copper
+
+**"Dr. Copper" - Economic Barometer:**
+
+**China Demand (50% of global):**
+- China-US trade war: Copper -20% (2018-2019)
+- China stimulus: Copper rallies sharply
+- Property sector troubles: Negative (major copper consumer)
+- Infrastructure spending: Positive
+
+**Chilean Supply (25% of global):**
+- Political instability (2019 protests): Copper +5%
+- Mining strikes: Immediate price spikes
+- Environmental restrictions: Long-term supply concerns
+- Water scarcity issues
+
+**Peruvian Supply (10% of global):**
+- Political instability frequent
+- Community protests at mines
+- Supply disruptions: Price supportive
+
+**Zambia/DRC (African Copper Belt):**
+- Political risk elevated
+- Infrastructure challenges
+- Chinese investment dominance
+
+**Energy Transition Demand:**
+- EVs use 4x copper vs ICE vehicles
+- Grid infrastructure buildout
+- Long-term bullish narrative
+
+**Geopolitical Implications:**
+- US-China tech war: Copper demand impact (semiconductors, data centers)
+- Green energy policies: Demand support
+- Recession fears: Demand destruction
+
+### Aluminum
+
+**China Production Dominance (60%):**
+- Energy-intensive production
+- Power shortages: Production curtailments, price spikes
+- Environmental regulations: Supply constraints
+
+**Russia Supply (~6%):**
+- Sanctions concerns (Ukraine war)
+- Aluminum rallied 2022
+- European smelters curtailed (high energy costs)
+
+**Guinea Bauxite (Major Supplier):**
+- Political instability (2021 coup)
+- Supply concerns for aluminum feedstock
+
+**Applications:**
+- Aerospace (geopolitical tensions affect demand)
+- Automotive (EVs increasing content)
+- Construction (economic growth sensitive)
+
+### Nickel
+
+**Indonesia Supply Dominance (Growing):**
+- Ore export ban (2020): Reshuffled global supply chains
+- Chinese investment in Indonesian processing
+- Environmental concerns
+
+**Russia Supply (~10%):**
+- Sanctions risk (Ukraine war)
+- Nickel short squeeze (LME chaos, March 2022): +250% in days
+- Tsingshan vs LME positions
+
+**Philippines Supply:**
+- Environmental regulations
+- Mining permit uncertainties
+- Typhoon disruptions
+
+**EV Battery Demand:**
+- Nickel-rich cathodes (NMC, NCA)
+- Competition with iron-phosphate (LFP) batteries
+- Indonesia-China battery supply chain
+
+### Zinc
+
+**China Production/Consumption (~40%):**
+- Galvanizing steel (construction, auto)
+- Smelter margins squeeze when energy costs high
+- Production cuts when unprofitable
+
+**Peru/Australia Supply:**
+- Mining disruptions
+- Concentrate availability
+
+**Russia Supply (~5%):**
+- Sanctions impact moderate
+
+## Agricultural Commodities
+
+### Wheat
+
+**Russia-Ukraine (30% of Global Exports):**
+- Black Sea export disruptions
+- Ukraine ports blockaded (2022): Wheat +50%
+- Russia export restrictions/export tax adjustments
+- Grain deal negotiations critical
+
+**Weather Events:**
+- Droughts in major producers (US Plains, Australia, Argentina)
+- Floods in harvest seasons
+- Climate change increasing volatility
+
+**India Export Bans:**
+- Domestic food security priorities
+- Heat waves trigger export restrictions
+- Sudden policy changes create price spikes
+
+**North Africa/Middle East Importers:**
+- Political instability when bread prices spike
+- Arab Spring correlation with wheat prices
+- Food security national security issue
+
+### Corn
+
+**US Production Dominance (35% of Global):**
+- Weather in Midwest (drought/floods)
+- USDA crop reports market-moving
+
+**Brazil/Argentina (Major Exporters):**
+- Weather patterns (La Niña impacts)
+- Currency fluctuations affect export competitiveness
+- Infrastructure challenges (Brazil transport)
+
+**China Demand:**
+- Livestock feed demand
+- Trade deal purchase commitments
+- ASF (African Swine Fever) impacts herd sizes
+
+**Ukraine Supply Disruptions:**
+- Corn exports halted during war
+- Black Sea logistics
+
+**Ethanol Demand:**
+- US biofuel mandates
+- Energy prices correlation
+
+### Soybeans
+
+**Brazil-China Trade:**
+- China imports 60% of global soybeans
+- US-China trade war: Brazil beneficiary
+- Brazil overtook US as top exporter
+
+**Argentina Processing:**
+- Crushing industry
+- Export taxes policy changes
+
+**Weather Risks:**
+- Brazil (drought in key states)
+- Argentina (La Niña flooding/drought cycles)
+- US Midwest (flash droughts)
+
+**China Demand Drivers:**
+- Livestock feed (pig herd cycles)
+- African Swine Fever devastation (2019): Demand collapsed
+- Herd rebuilding: Demand recovery
+
+**Geopolitical Leverage:**
+- US-China trade tool
+- Brazil-China relationship benefits
+
+## Rare Earth Elements / Critical Minerals
+
+### Rare Earths
+
+**China Dominance (60% Production, 90% Processing):**
+- Export restrictions as geopolitical tool
+- US-China tensions: Supply security concerns
+- Price manipulation capability
+
+**Applications:**
+- Defense systems (missiles, jets)
+- EVs (motors)
+- Wind turbines
+- Electronics
+
+**Alternative Supply Development:**
+- US (Mountain Pass mine)
+- Australia (Lynas)
+- Processing capacity bottleneck
+
+**Historical Example:**
+- 2010 China-Japan dispute: China restricted exports, prices surged
+
+### Lithium
+
+**EV Battery Critical Component:**
+
+**Australia/Chile Supply (~75%):**
+- Australia: Spodumene (hard rock)
+- Chile: Brine deposits (Atacama)
+- Political risks moderate
+
+**China Processing Dominance (~60%):**
+- Refining bottleneck
+- US/Europe scrambling to build capacity
+
+**Argentina "Lithium Triangle":**
+- Chile-Argentina-Bolivia
+- Nationalization risks
+- Water usage controversies
+
+**Price Volatility:**
+- 2022: +400% on EV demand surge
+- 2023: -70% on overcapacity concerns
+- Geopolitical diversification premium
+
+### Cobalt
+
+**DRC Production (70% of Global):**
+- Political instability
+- Child labor controversies
+- Chinese control of mines
+
+**Battery Chemistry Shift:**
+- Reducing cobalt content (ethical concerns, cost)
+- Cobalt-free batteries development
+
+**Sanctions/Ethical Sourcing:**
+- Supply chain scrutiny
+- Price premium for certified ethical cobalt
+
+## Regional Geopolitical Frameworks
+
+### Middle East
+
+**Oil Price Transmission:**
+- Conflicts → Oil ↑ → Inflation ↑ → Rate hikes → Equities ↓
+- Energy stocks benefit
+- Emerging markets pressured (oil importers)
+
+**Safe Haven Flows:**
+- Gold, USD, JPY, CHF rally
+- Equities decline (especially European, EM)
+
+**Shipping Disruptions:**
+- Suez Canal (10% of global trade)
+- Strait of Hormuz (oil)
+- Red Sea shipping costs
+
+### Russia-Europe Energy
+
+**Natural Gas Dependency:**
+- Europe vulnerable
+- Russia leverage
+- Coal, LNG, nuclear substitutes
+
+**Sanctions Effectiveness:**
+- Energy payments carve-outs complicated
+- Oil price caps
+- Gray market/smuggling
+
+### Asia-Pacific
+
+**Taiwan Strait Tensions:**
+- Semiconductor supply chain choke point
+- Shipping disruptions (South China Sea)
+- Technology stocks highly sensitive
+- Safe-haven flows massive if conflict
+
+**South China Sea:**
+- Shipping lanes (1/3 of global trade)
+- Energy deposits disputes
+
+### Latin America
+
+**Commodity Exporters:**
+- Political shifts affect mining/energy policy
+- Nationalization risks
+- Currency volatility amplifies commodity moves
+
+**Examples:**
+- Peru mining conflicts
+- Chile constitutional changes (mining tax debates)
+- Brazil Amazon policies (agricultural land)
+- Argentina capital controls, export taxes
+
+## Correlation Summary Table
+
+| Geopolitical Event Type | Oil | Gold | Copper | Wheat | USD | Equities |
+|------------------------|-----|------|--------|-------|-----|----------|
+| Middle East War | ↑↑ | ↑↑ | ↓ | ↑ | ↑ | ↓↓ |
+| Russia-Ukraine | ↑↑ | ↑↑ | ↓ | ↑↑ | ↑ | ↓↓ |
+| US-China Trade War | ↓ | ↑ | ↓↓ | ↔ | ↑ | ↓ |
+| Taiwan Conflict | ↑ | ↑↑ | ↓↓ | ↑ | ↑↑ | ↓↓↓ |
+| Emerging Market Crisis | ↓ | ↑ | ↓↓ | ↔ | ↑↑ | ↓↓ |
+| Banking Crisis | ↓↓ | ↑↑ | ↓↓ | ↓ | ↑ | ↓↓↓ |
+
+**Legend:**
+- ↑↑↑ = Very strong positive
+- ↑↑ = Strong positive
+- ↑ = Moderate positive
+- ↔ = Neutral/mixed
+- ↓ = Moderate negative
+- ↓↓ = Strong negative
+- ↓↓↓ = Very strong negative
+
+## Time Horizon Considerations
+
+**Immediate (Days):**
+- Risk-off knee-jerk reactions
+- Safe haven flows
+- Energy spikes if supply threatened
+
+**Short-term (Weeks-Months):**
+- Reality check vs initial fears
+- Supply chain actual disruptions materialize
+- Central bank/government responses
+
+**Medium-term (Months-Year):**
+- Economic impact transmission
+- Inflation effects through commodity channel
+- Policy adjustments (strategic reserves, alternative suppliers)
+
+**Long-term (Years):**
+- Supply chain restructuring
+- Energy transition acceleration
+- Reserve currency implications