This week, the conflict between India and Pakistan escalated, with India launching multiple military strikes against its neighbor. Meanwhile, the U.S. agreed to hold high-level trade talks with China in Geneva this weekend, their first such negotiations during President Donald Trump’s second term in office. In the Russia-Ukraine conflict, Russian President Vladimir Putin hosted Chinese President Xi Jinping for Moscow’s Victory Day parade, while Ukrainian President Volodymyr Zelenskyy proposed establishing a demilitarized zone between Russia and Ukraine. In the Middle East, the U.S. agreed to a ceasefire with Yemen’s al-Houthi forces after a successful mediation by Oman. The U.S. also plans to continue nuclear negotiations with Iran this weekend. Israel called up reservists to prepare for its large-scale incursion into Gaza. The U.K. was the first country to conclude a trade deal with the U.S., securing a reduction in tariffs on the hardest-hit sectors of steel and cars.
Weekly Forecast Monitor: May 9, 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 diplomatic de-escalation as Putin declared a 72-hour ceasefire May 8-10 while Russia commences World War II victory celebrations and hosts Xi in Moscow. Xi and Putin signed an agreement to continue deepening strategic cooperation and to further the “no-limits friendship” between Moscow and Beijing. Zelenskyy called Russia’s limited ceasefire “pointless” and said Ukraine is prepared to agree to an unconditional 30-day ceasefire “at any moment.” Ukrainian Foreign Minister Andrii Sybiha claimed “hundreds” of Russian violations of Putin’s own ceasefire. Trump called for a 30-day unconditional ceasefire and threatened further sanctions for violations. Kyiv proposed a demilitarized zone between Russia and Ukraine to be controlled by both countries and monitored by third parties. Ukraine repeatedly launched drone attacks against Moscow in the week leading up to Xi’s visit, and Russian war bloggers reported fresh Ukrainian incursions into Russia’s Kursk region. Russia attacked cities across Ukraine with combined drone and missile bombardments.
2 Middle East
Summary
Conflicts in the Middle East trended toward diplomatic de-escalation as the U.S. and Iran plan to meet in Muscat this weekend for negotiations over Iran’s nuclear program. The U.S. and the al-Houthi rebel group reached a ceasefire agreement mediated by Oman, as the U.S. agreed to end its bombing campaign in Yemen in exchange for the Houthis refraining from attacking U.S. vessels. Unnamed Iranian officials said their country pressured the Houthis into the agreement ahead of planned nuclear negotiations with the U.S. The UAE has brokered backchannel lines of communication between Syria and Israel to deconflict over security issues. In a meeting with Syrian President Ahmed al-Sharaa, French President Emmanuel Macron promised to lobby the EU for relief from sanctions on Syria and the U.S. to maintain a military presence there. Meanwhile, Israel has called up tens of thousands of reservists in support of a planned escalation to seize and occupy the entirety of the Gaza Strip as Israeli airstrikes killed dozens of Palestinians across the territory. Israeli forces bombed an airport in Sanaa in retaliation for a Houthi attack against Ben Gurion Airport and threatened Iran over its continued support for the group. The Kurdistan Workers’ Party announced it has made “historic” choices amid expectations that it may soon agree to disarm and disband. The group has yet to make a formal announcement.
3 U.S./China/Indo-Pacific
Summary
Tensions in the Indo-Pacific trended toward diplomatic de-escalation as China and the U.S. agreed to hold an initial high-level meeting this weekend in Geneva to discuss trade, with Trump proposing to reduce tariffs on Chinese imports to 80%. Meanwhile, the U.S. and Japan agreed to start working-level consultations on trade. Xi visited Moscow to participate in Russia’s Victory Day celebrations and to discuss deepening bilateral relations, including the potential involvement of Chinese companies in Russia’s liquified natural gas industry. Taiwan’s Ministry of National Defense reported that weapons shipments from the U.S. have been accelerating. Chinese and Philippine navy ships clashed near the contested Scarborough Shoal in the South China Sea.
4 Other Hotspots
India/Pakistan
India launched multiple missiles, striking nine targets in Pakistan and Pakistan-administered Kashmir in response to a mass shooting two weeks ago that killed 26 Indian tourists. The attacks targeted terrorist camps, India’s defense ministry said. Pakistan said it had shot down Indian fighter jets and uncrewed aerial vehicles and stated it could respond at any time as both sides reported at least 45 civilians dead. India further accelerated the construction of hydropower infrastructure following its suspension of the Indus Waters Treaty with Pakistan, a move Pakistan had previously warned it would consider an act of war. China and the U.S. have both called for restraint. Forecast – military escalation scenario
United States/Greenland
Several heads of U.S. intelligence agencies received a “collection emphasis message” from the Office of the Director of National Intelligence, directing them to learn more about Greenland’s independence movement and sentiment toward U.S. resource extraction. Forecast – hybrid escalation scenario
United States/United Kingdom
Trump and British Prime Minister Kier Starmer announced a trade deal between their countries, marking the first agreement for the U.S. since tariffs were paused in early April. The deal will likely reduce tariffs on the British steel and automotive sectors but will fall short of a free trade deal. Forecast – diplomatic de-escalation scenario
Sudan
The Rapid Support Forces increased the intensity of their drone attacks, culminating in strikes on Sudan’s strategic fuel depots and an electricity substation in Port Sudan, marking a new escalation in the conflict and likely exacerbating difficulties in providing humanitarian aid. Sudan subsequently cut diplomatic ties with the United Arab Emirates after accusing it of backing the paramilitary group. Forecast – security destabilization scenario
The Global Connectivity Tracker examines the impact of geopolitical dynamics on key themes like trade, technology, and energy/climate.
United States
LNG
What Happened
U.S. liquefied natural gas suppliers saw a 20 percent year-over-year increase in export sales over the first four months of 2025, a bump driven chiefly by European buyers.
Significance/Outlook
Winter weather that prompted the highest output of gas-fired electricity generation in Europe in four years, combined with an eagerness to buy U.S. LNG in part to appease President Donald Trump as trade negotiations over U.S. tariffs continue, contributed to an almost 50 percent jump in European purchases of U.S. LNG from January to April as compared with the same period in 2024. European buyers looking to replenish natural gas stockpiles, which have dropped by a third over last year’s levels, also prompted increased LNG sales as winter demand rose. However, the outlook for U.S. LNG sales over the remainder of the year appears less robust. Over the coming months when demand for natural gas traditionally drops, Europe is more likely to favor cheaper pipeline gas over more expensive U.S. LNG to rebuild its inventories. Meanwhile as U.S. tariffs suppress Asian economic activity, gas demand and LNG imports from the United States to Asia are poised to drop in the short term.
Argentina/Chile
Copper
What Happened
Lundin Mining Corporation announced a significant copper discovery at its Filo del Sol project near the border between Chile and Argentina.
Significance/Outlook
A mineral resource estimate at Filo del Sol indicated one of the world’s most significant copper discoveries in the last 30 years. The project is now ranked among the top 10 copper resources in the world. Vicuña, a joint venture between Lundin Mining and BHP, the world’s largest mining company, said the find, which includes the Filo del Sol and Josemaria deposits, totals 13 million metric tons of basic metals. Copper is an essential component of electric vehicles, energy storage devices, and infrastructure for renewable energy sources. The company added that the deposit contains around 659 million ounces of silver and 32 million ounces of gold, potentially making the project one of the largest gold and silver mines in the world.
OPEC+/Saudi Arabia
Oil
What Happened
OPEC+ members have agreed to another oil production increase that will bring over 410,000 additional barrels per day (bpd) to the market in June, with prospects of more increases over the course of the year.
Significance/Outlook
Saudi Arabia pushed for the increase apparently in response to fellow OPEC+ members such as Iraq and Kazakhstan that have consistently pumped more crude than allocated under voluntary production quotas set in 2022 after demand dropped during the COVID-19 pandemic. The agreement, coupled with a production boost of about the same size announced in April, will return about 800,000 bpd to the market by June, with further production increases likely if quota compliance does not improve. The production increase comes as oil prices fell to near four-year lows amid uncertain demand growth sparked by the U.S. trade war with China.
Qatar/Japan
LNG
.Japan’s top three LNG suppliers in 2023 were Australia (26.6 mt or 41%), Malaysia (10.2 mt or 15.8%), and Russia (6.3 mt or 9.7%). While this agreement would result in increased Japanese LNG imports from Qatar, volumes would remain relatively low in comparison. Japan is also exploring increasing LNG imports from the United States.
What Happened
Qatar Energy is in discussions with Japanese energy companies over the possibility of entering into a long-term liquefied natural gas contract agreement from the Qatar’s North Field LNG expansion.
Significance/Outlook
The deal would boost Qatar’s LNG market position. Qatar exported 79.54 million metric tons (mt) of LNG in 2024, third globally after the U.S. and Australia. If the deal is completed, Japanese energy companies, including JERA and Mitsui & Co., will split at least 3 million mt of volume annually. Last year, Japan imported 65.89 million tons of LNG, making it the second-largest buyer of LNG in the world after China. This deal would help Japan broaden its LNG supply chain. Japan also plans to increase LNG purchases from the U.S., the UAE, and Oman to meet the increased power demand of AI data centers.
UAE/China
Energy
Chinese companies buying LPG from the UAE or other Middle East countries are replacing tariff-hit U.S. imports. This will help to secure the high demand of LPG needed by Chinese plastics manufacturers. The rerouting of U.S. cargoes will affect global trade flows and increase freight prices. In addition, Chinese LPG purchasers may find Middle Eastern gas a poor substitute for U.S. LPG because of butane levels not found in U.S. shipments.
What Happened
Industry sources told Reuters that the Abu Dhabi National Oil Company (ADNOC) will replace some of its liquefied petroleum gas (LPG) shipments to India with cheaper U.S. cargoes.
Significance/Outlook
As U.S.-China tariffs change global trade patterns and increase the LPG pricing disparity between Middle Eastern countries and the U.S., ADNOC will substitute a portion of its LPG shipments to India with cheaper U.S. cargoes from June. China will get LPG generated by ADNOC to meet the surging demand for LPG from suppliers other than the United States since China raised tariffs on U.S. exports. If they are unable to obtain enough of the feedstocks, several factories in China run the risk of shutting down. India, the world’s second-largest LPG importer, will see a decrease in its import costs because of this move.