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Weekly Forecast Monitor: Feb. 28, 2025
This week, the United States conducted Ukraine-related diplomacy with Russia, France, and the U.K., while Ukrainian President Volodymyr Zelenskyy traveled to Washington to finalize a critical minerals deal. In the Indo-Pacific, Taiwan is investigating a Chinese ship’s possible role in recent damage to one of its undersea cables, while the Trump administration unveiled sanctions against […]
The Geopolitical Hotspots Monitor examines the outlook for key geopolitical hotspots around the world.
1 Russia/Ukraine Conflict
Summary
The Russia/Ukraine war trended toward diplomatic de-escalation as Trump hosted the leaders of France and the U.K. at the White House, where French President Emmanuel Macron publicly disputed Trump’s recent claims on Ukraine but gained vocal support from Trump for a European peacekeeping force there. British Prime Minister Keir Starmer called for U.S. troops to serve as a security backstop to that force. U.S. and Russian diplomats met in Istanbul to advance peace negotiations in Ukraine, as well as the restoration of full functioning and staffing of U.S. and Russian embassies in Washington and Moscow. Zelenskyy traveled to Washington to discuss the deal to give the U.S. rights to 50% of Ukraine’s mineral resources. Russian Defense Minister Sergei Shoigu met with Chinese President Xi Jinping in Beijing, while Chinese Foreign Ministry Spokesman Lin Jian said that U.S. attempts to drive a wedge between China and Russia were “doomed to fail.”
2 Middle East
Summary
Conflict in the Middle East trended toward diplomatic de-escalation and military escalation scenarios as Hamas returned six hostages and the remains of four others to Israel in exchange for 620 Palestinian prisoners, concluding the first phase of their cease-fire deal. Meanwhile, Israeli Defense Minister Israel Katz declared the Israel Defense Forces would prevent the return of 40,000 Palestinians to West Bank refugee camps from which they had evacuated for at least the “next year.” Israeli Prime Minister Benjamin Netanyahu announced that Israel will pursue the “complete demilitarization” of southern Syria and occupy Syrian territory in the Golan Heights indefinitely as Israel conducted airstrikes against military infrastructure south of Damascus.
3 U.S./China/Indo-Pacific
Summary
Tensions in the Indo-Pacific trended toward hybrid escalation as Taiwan began an investigation into the possible role of a Chinese-owned ship in recent damage to undersea cables. The Trump administration issued a number of economic measures targeting China, including a directive to limit Chinese investment in the U.S. and sanctions against the Chinese oil trade. Trump further announced he would add tariffs of 10% on top of those already imposed on Chinese imports next week. China held unannounced military drills off the coast of Taiwan, while Japan and the Philippines held talks to expand defense cooperation.
4 Other Hotspots
United States/European Union
- Trump announced he will impose 25% tariffs on EU goods that explicitly focused on automobile imports. No official date for the sanctions was set, and the EU threatened to retaliate. Forecast – hybrid escalation scenario
United States/Canada/Mexico
- Trump announced that the 25% tariffs on Canada and Mexico that previously had been postponed will go into effect on March 4. Forecast – hybrid escalation scenario
Democratic Republic of the Congo
The Global Connectivity Tracker examines the impact of geopolitical dynamics on key themes like trade, technology, and energy/climate.
1
U.S./Mexico/Canada
Oil
Disruption level: Medium
The energy tariffs may make fuel more expensive for U.S. consumers and affect refiners’ bottom lines, but they are unlikely to significantly affect trade volumes between Canadian producers, who have limited options for selling their oil elsewhere, and the U.S.
What Happened
Some fuel refiners in the United States are considering retooling their plants to handle lighter grades of domestic crude oil as the March 4 deadline approaches for tariffs of 10% on Canadian and 25% on Mexican crude oil imports that had been paused in February to take effect.
Significance/Outlook
About 70% of U.S. refinery capacity is geared toward processing heavier “sour” grades of crude oil chiefly supplied by Canada and Mexico. Those grades cost less to purchase than the lighter “sweet” crude grades commonly produced in the United States. Canada supplies most of the oil imported by the United States, about 4 million barrels a day, much of which is refined in the Midwest. Some refiners have the ability to switch some production to lighter grades of crude but still must blend that with heavier grades. The lighter oil produces less diesel and jet fuel when refined, both of which are more profitable than other refined products. Some refiners would need to invest in new equipment to handle the lighter crude, dragging down profits and raising prices for consumers, while others could consider reducing output volumes, driving supplies down.
2
U.S./Ukraine
Critical Minerals
Enhancement Level: High
The deal would allow U.S. companies and specialists to help Ukraine mine and manage its critical natural minerals, strengthening both economies and relations between the two countries.
What Happened
The critical minerals deal that would give the United States a stake in the Ukraine’s mineral wealth would aid in the long-term development and restoration of the war-ravaged country, according to U.S. Treasury Secretary Scott Bessent.
Significance/Outlook
Ukraine’s natural resource deposits, including critical raw materials (graphite, lithium, and rare earth metals), have the potential to fuel economic growth after its the war with Russia ends. The deal, if finalized, would strengthen the U.S. commitment to Ukraine and lay the groundwork for its reconstruction and economic recovery. Under terms of the deal, Ukraine will allocate revenue from natural resources, associated infrastructure, and other assets to a fund long-term reconstruction and development, while the U.S. will gain economic and governance rights to accelerate Ukraine’s recovery. Ukraine’s minerals will help the U.S. reduce its dependence on China, which controls 75% of global rare earth elements.
3
EU/Russia
Energy
Disruption level: Medium
Russian income from fossil fuels indicates that its economy is operating at full capacity during the war. The Russian government intends to devote 6% of the country's gross domestic product to military spending in 2025.
What Happened
A report by Finland’s Energy and Clean Air Research Centre noted that the European Union spent more on fossil fuels imported from Russia in the third year of the war in Ukraine than it did on financial aid for Ukraine.
Significance/Outlook
European purchases of Russian oil, natural gas, and coal have continued despite Western sanctions targeting Russia. In 2024, the European Union imported fossil fuels worth $23 billion while sending $19.6 billion in aid to Ukraine. Russia brought in $254 billion from fossil fuel sales in 2024, with that figure totaling $890 billion since its invasion of Ukraine. Sales to China, India, and Türkiye accounted for three quarters of those totals. Russia has spent about $200 billion on its war effort, according to former U.S. Secretary of Defense Lloyd Austin. Russian defense spending rose from $86.4 billion in 2022 to about $142 billion in 2025, with fossil fuel sales providing a key source of income.
4
Qatar/Asia
Liquefied Natural Gas
Disruption level: Low
Qatar, the world’s second-largest LNG exporter, has extensive experience securing major supply agreements. Alternative suppliers may also struggle to completely meet rising Asian demand, reinforcing Qatar’s position as a reliable long-term partner.
What Happened
Asian countries are negotiating for lower prices and greater flexibility in Qatar’s long-term liquefied natural gas agreements.
Significance/Outlook
The expansion of Qatar’s LNG sector, set to increase exports by 85% over current levels, increasing from its current level of 77 million tonnes per annum (MTPA) to 142 MTPA by 2030, depends on securing long-term purchase deals, making ongoing price negotiations with Asian importers critical. Qatar’s Brent crude-linked pricing model and its strict delivery terms are making it harder to attract buyers, as major importers like China and India seek more flexible agreements. Meanwhile, competition from suppliers in the U.S., UAE, and Oman offering shorter-term, adaptable contracts provides Asian buyers with alternatives. Pakistan also seeks to renegotiate its LNG deal to reduce costs. These developments could affect Qatar’s ability to secure long-term buyers, influencing its position in the global LNG market.
5
China
Energy/ Climate
Enhancement Level: Medium
China’s early achievement of its 2030 renewable energy targets highlights an accelerated transition, reinforcing its global leadership in clean energy supply chains. If this momentum persists, China could further solidify its competitive edge in the renewable energy sector, shaping future markets and technological advancements.
What Happened
An analysis by the British website Carbon Brief noted that Chinese clean energy investments surged to $940 billion in 2024 with clean energy technologies contributing over 10% of its economic growth for the first time.
Significance/Outlook
The investments reinforce China’s position as a global leader in renewable energy and low-carbon technologies. The electric vehicle, battery, and solar power industries are the trend’s primary drivers, accounting for three-quarters of the economic contributions of the clean energy sector and attracting over half of total investment. However, ongoing coal investments raise concerns about China’s long-term emissions goals, with 94.5 gigawatts of new power plants, the highest level in nearly a decade, in development in 2024. China’s clean energy trajectory will be shaped by forthcoming policy decisions and the next five-year plan (2026-2030), which will determine the balance between accelerating renewable energy expansion and maintaining reliance on fossil fuels.
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