This week, after U.S. President Donald Trump’s reciprocal tariff announcement sent global markets tumbling, he announced a 90-day pause on the levies for countries that did not retaliate, reducing tariffs to 10% for all imports. The U.S., however, increased tariffs on Chinese imports to 145%, prompting China to raise its tariffs on U.S. imports to 125% and to engage in strong outreach to the European Union, the Association of Southeast Asian Nations (ASEAN), and Australia. In Ukraine, Russian and Ukrainian forces launched new offensives while officials from the U.S. and Russia met in Istanbul for normalization talks and separately conducted a prisoner swap. In the Middle East, the U.S. and Iran agreed to conduct a first round of negotiations Saturday in Oman on a nuclear deal, while Israel and Türkiye discussed deconfliction of their operations in Syria.
Weekly Forecast Monitor: April 11, 2025
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 military escalation as Russia initiated a ground offensive against the regions of Sumy and Kharkiv in northeastern Ukraine. Ukrainian President Volodymyr Zelenskyy confirmed that Ukraine has initiated an offensive in Russia’s Belgorod region in a bid to divert Russian resources and personnel from the Sumy and Kharkiv offenses. Zelenskyy also stated that at least 155 Chinese citizens are fighting for Russia, after Ukrainian forces captured and interrogated two Chinese nationals inside Ukrainian territory. Meanwhile, U.S. Special Envoy to the Middle East Steve Witkoff met with Russian investment envoy Kirill Dmitriev in St. Petersburg on April 11, and may meet with Russian President Vladimir Putin. The U.S. and Russia conducted a prisoner exchange, as American and Russian diplomats met in Istanbul to conduct talks focused on the normalization of relations between Washington and Moscow. Meanwhile, European allies of the U.S. urged the U.S. Department of Defense to coordinate with them amid rumors that Washington is considering reducing troop levels in Europe. Planning efforts for a proposed combined European peacekeeping force in Ukraine stalled due to lack of commitments from the U.S.
2 Middle East
Summary
Conflicts in the Middle East trended toward diplomatic de-escalation as Trump announced that the U.S. and Iran will begin direct negotiations over Iran’s nuclear program on April 12 in Muscat. Iranian Foreign Minister Abbas Araghchi described the Omani-mediated negotiations as “indirect,” although he is expected to meet with Witkoff. Iran is expected to propose an interim deal to the U.S. that would lead to a reduction in its uranium enrichment and increase access for U.N. weapons inspectors. Meanwhile, the U.S. announced fresh sanctions against Iranian entities related to Iran’s nuclear program and continued its air campaign against al-Houthi rebel positions in Yemen. A senior Hezbollah official announced that the group is willing to discuss disarmament with Lebanese President Joseph Aoun on the condition that Israel first withdraws from the territory it occupies in southern Lebanon. Israeli airstrikes in Gaza killed dozens of Palestinians, as the Israel Defense Forces continued to expand its ground campaign in the territory. French President Emmanuel Macron said France could recognize a Palestinian state in June.
3 U.S./China/Indo-Pacific
Summary
Tensions in the Indo-Pacific trended toward hybrid escalation as the U.S.-China trade war intensified following the U.S. decision to ramp up tariffs on China to 145%, despite pausing reciprocal tariffs on other countries. The tariff increase prompted China to raise its own tariffs on U.S. imports to 125% as it conducted strong outreach urging the EU, Australia, and ASEAN countries to present a united front against Washington. Other Asian trading partners of the U.S., including Taiwan and India, did not retaliate after the initial announcement of U.S. reciprocal tariffs and will be among the countries lining up to negotiate. U.S. Secretary of Defense Pete Hegseth visited Panama, where he vowed to remove Chinese influence from the Panama Canal.
4 Other Hotspots
United States
After imposing large reciprocal tariffs on most global trading partners and sending markets tumbling, Trump reversed course, maintaining tariffs for 90 days at a universal 10% for all countries that did not retaliate. Forecast – diplomatic de-escalation
Germany
Chancellor-in-waiting Friedrich Merz secured a coalition deal between his party, the Christian Democratic Union, and the Social Democrats to form a ruling government that excludes the far-right Alternative for Germany party, which came second in the elections in February. Forecast – political stabilization scenario
Algeria/Mali
Algeria and Mali have closed their airspaces to each other following a dispute involving a surveillance drone shot down near the border. Forecast – hybrid escalation scenario
Sudan
The Red Cross issued a warning about drone attacks damaging critical infrastructure in the country, while the Sudanese government told the International Court of Justice that the United Arab Emirates was violating the U.N. Genocide Convention by supporting the Rapid Support Forces. Forecast – security stabilization scenario
The Global Connectivity Tracker examines the impact of geopolitical dynamics on key themes like trade, technology, and energy/climate.
U.S./Thailand
Energy/Trade
What Happened
In an effort to avoid tariffs, Thailand followed Vietnam’s lead to become the second Asian nation making a commitment to increase the amount of energy commodities it purchases from the United States.
Significance/Outlook
Thailand’s trade surplus with the U.S. is over $45 billion, ranking it 11th globally. The surplus was the main U.S. justification for putting a 36% tariff, which has since been paused, on Thai exports. Thailand has committed to importing more U.S. energy, aviation, and agricultural goods to narrow the surplus. For the energy sector, Thailand may invest in U.S. natural gas development and buy U.S. gas.
Azerbaijan/Georgia/ Türkiye/Bulgaria
Energy
The four countries will encourage public-private cooperation to modernize energy networks and invest in cooperative projects to increase green power transmission capacities and trade. The cooperation initiatives will contribute to the improvement of energy infrastructure, as well as the creation of incentives for the use of renewable energy supplies. This will help to reduce dependency on fossil fuels, lowering greenhouse gas emissions and helping to mitigate climate change.
What Happened
Azerbaijan, Georgia, Türkiye, and Bulgaria have signed a memorandum of understanding regarding renewable electricity transmission and trade.
Significance/Outlook
This agreement will leverage Azerbaijan’s green energy potential, ambitious projects, track record in energy export infrastructure, and collaborative energy supply activities to increase green energy collaboration among the signatories. Improved transmission and trade of renewable energy could facilitate regional energy security, enhance energy integration among the four countries, and facilitate the construction of infrastructure for cross-border electricity interconnections. The establishment of this green energy corridor will contribute to the development of collaborative investment projects, the expansion of power infrastructure, and the transmission and trading of green electricity.
Saudi Arabia
Oil
The move offers limited upside amid elevated geopolitical uncertainty, particularly as escalating U.S.-China trade tensions threaten to further decrease global oil demand and heighten the risk of oversupply. However, the Saudi decision is likely tactical rather than long-term and could be adjusted depending on how market conditions evolve.
What Happened
Saudi Arabia cut its official selling prices for crude oil ahead of a planned OPEC+ production increase.
Significance/Outlook
Price cuts for Arab Light crude are targeted for May, with Asian buyers receiving a $2.30 per barrel discount, bringing it to $1.20 above the Oman/Dubai average. Price reductions for Europe and the United States were more modest, at around 50 cents and 20 cents per barrel, respectively. As a result, Brent crude prices fell by over 3% the following day, settling at $63.30 per barrel, marking their lowest level since April 2021. The move comes in response to OPEC+’s decision to implement an unexpected production increase of 411,000 barrels per day in May, signaling confidence in the potential recovery of global oil demand. The pricing shift reflects Riyadh’s effort to maintain competitiveness in its core Asian market amid a broader geopolitical uncertainty driven by U.S. tariff threats.
India/UAE/Sri Lanka
Energy
What Happened
The United Arab Emirates has joined with India to sign a deal to build an energy hub in the Sri Lankan port city of Trincomalee. In a separate deal, Indian power company National Thermal Power Corp. and the Ceylon Electricity Board entered a joint venture to build a $100 million solar power project.
Significance/Outlook
India and China have been locked in an intensifying competition for influence in Sri Lanka, with the energy hub proposal coming a year after Chinese state-owned energy firm Sinopec signed a deal to build a $4.5 billion oil refinery in Hambantota, a port on Sri Lanka’s southern coast. The energy hub’s initial project will be the construction of a multipurpose pipeline and could involve an existing tank farm owned in part by a Sri Lankan subsidiary of Indian Oil Corp. The UAE’s role in the energy hub has not yet been defined, according to Indian officials, but will come into focus once the businesses involved conduct feasibility and financing studies.
Russia
Oil
What Happened
Russia’s Urals crude price reached $52.76 per barrel, its lowest level in two years and well below the $70 benchmark used for the country’s 2025 federal budget planning.
Significance/Outlook
The Russian government attributed the price slide to the recent wave of U.S. tariff announcements that have unsettled global trade flows. The price drop could significantly widen Russia’s fiscal gap, particularly as military spending accelerates in early 2025. Oil and gas revenues make up nearly 30% of the Russian federal budget. These revenues were already under strain, falling 17% year-on-year in March to $12.8 billion, as forced crude discounts and a stronger ruble weighed on inflows. A continued decline in prices may pressure the Kremlin to revise revenue projections as energy revenues, already weakened by market and currency factors, remain central to fiscal stability.