Geopolitical crises, the energy sector, and the financial capital market

Abstract

The events of 2022-2023, including sanctions policies and the introduction of price ceilings on Russian oil and gas, have demonstrated the significant impact of geopolitical crises on the financial capital market, especially in the energy sector. This article provides an overview of the modern literature on the influence of geopolitical risks on the financial capital market with a focus on the energy sector. The key factors determining the stability of the financial capital market are identified, and recommendations are given on how to diversify investment portfolios in light of these risks. The authors present a mathematical model for optimizing investment portfolios in modern conditions. The article emphasizes the importance of understanding how geopolitical risks can affect the financial capital market and offers insights into how investors can manage these risks to achieve stable returns. The authors conclude that diversification and risk management are crucial for successful investing in today's volatile geopolitical climate and highlight the need for continuous monitoring of geopolitical risks to ensure that investment decisions remain informed and strategic. Overall, this article provides a comprehensive guide to understanding the relationship between geopolitical risks, the energy sector, and the financial capital market, and offers practical advice for investors seeking to optimize their investment portfolios in these challenging conditions.