This week, Israel escalated its military campaign against Iran’s nuclear and military infrastructure, while the U.S. weighed potential involvement in the conflict. In the Indo-Pacific, Taiwan added Chinese companies to its export blacklist, limiting their access to advanced microchips, while concerns lingered over the impact of Chinese rare earth elements export curbs despite last week’s U.S./China trade agreement. In the Russia/Ukraine war, Ukrainian operations halted Russian advances on Sumy, while leaders of the G7 discussed new sanctions against Russia.
Weekly Forecast Monitor: June 20, 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 a Ukrainian counteroffensive halted Russia’s advance in Ukraine’s northeast Sumy region. Russia continued missile and drone bombardments of Ukrainian cities, including a drone strike in Kyiv that killed at least 30. During the G7 summit, Canadian Prime Minister Mark Carney announced a $1.5 billion military aid package for Ukraine, as well as new sanctions targeting Russian energy markets and its ongoing efforts to evade sanctions. The U.K. enacted new sanctions against Russia’s shadow fleet, and French President Emmanuel Macron announced the European Union is preparing a new sanctions package targeting Russia. North Korea said it will deploy 6,000 personnel to help rebuild infrastructure in Russia’s Kursk region. U.S. Special Envoy for Ukraine and Russia Keith Kellogg is scheduled to meet with Belarusian President Alexandr Lukashenko in Minsk.
2 Middle East
Summary
The Middle East trended toward military escalation as Israeli attacks against Iranian nuclear, military, and government infrastructure and personnel continued. Iran retaliated with missile and drone barrages against Israeli cities and threated U.S. military bases in the Middle East. Israeli Prime Minister Benjamin Netanyahu said Israel’s campaign “could certainly” result in an Iranian regime change. U.S. President Donald Trump called for Iran’s “unconditional surrender” and set a two-week deadline for a decision on whether the U.S. would participate in offensive operations inside Iran, as the U.S. deployed military aircraft to the region. Trump rejected an Israeli proposal to kill Iranian Supreme Leader Ayatollah Ali Khamenei but publicly posted that the U.S. is tracking his location and that he remains safe, “for now.” Israeli Defense Minister Israel Katz ordered the IDF to “destabilize” the Iranian government by causing a massive evacuation of Tehran and threatened to assassinate Khamenei in retaliation for an Iranian missile strike on an Israeli hospital. Iran informed Qatari and Omani mediators that it will not consider ceasefire talks while it is under active bombardment from Israel. Meanwhile, Iranian Foreign Minister Abbas Araghchi is scheduled to meet with senior diplomatic officials from the U.K., France, Germany, and the EU in Geneva on June 20 to discuss nuclear negotiations.
3 U.S./China/Indo-Pacific
Summary
The Indo-Pacific trended toward hybrid escalation as Taiwan blacklisted several Chinese companies, further limiting China’s access to microchips used in AI development. Despite last week’s U.S.-China framework deal, concerns about China’s curbs on specific rare earth exports used in the defense and battery industries have persisted, drawing condemnation from the EU and other trade partners. Japan agreed to shore up defense cooperation with the EU and reiterated last week’s commitment to work closely with South Korea on shared challenges.
4 Other Hotspots
Group of Seven
The G7 summit in Kananaskis, Canada, ended without the release of a joint communiqué. While Canada and India agreed to normalize ties, and statements calling on a Gaza ceasefire were issued, Trump did not meet with the Ukrainian or Mexican presidents as had been hoped by attending parties and called EU and Japanese efforts to make a trade deal with the U.S. insufficient. His early departure as combat between Iran and Israel intensified led analysts to note a lack of decision-making momentum going into next month’s NATO summit. Forecast – diplomatic de-escalation scenario
United States
Trump hosted a military parade on Saturday, while counterprotests with an estimated 5 million participants were held nationwide. Trump subsequently ordered immigrant crackdowns to be focused on Democratic-run cities. Forecast – political destabilization scenario
Armenia/Türkiye
The leaders of both countries held talks to normalize ties focused on potentially reopening their joint border as well as on addressing the ongoing Israel/Iran war. Forecast – diplomatic de-escalation scenario
The Global Connectivity Tracker examines the impact of geopolitical dynamics on key themes like trade, technology, and energy/climate.
1
Japan/United States
Liquefied Natural Gas
What Happened
JERA, Japan’s largest power generator, announced it will increase U.S. liquefied natural gas (LNG) purchases to 5.5 million metric tons annually by 2030, raising the U.S. share of its portfolio from around 10% to nearly 30%.
Significance/Outlook
The new volumes will be secured through long-term contracts with U.S. suppliers such as Cheniere, Sempra Infrastructure, and Commonwealth LNG. As of early 2025, JERA sources about 40% of its LNG from Australia. This shift is expected to lower Australia’s market share to roughly 28–30%, reflecting Tokyo’s broader effort to diversify its sources and enhance energy security. The move reflects Japan’s growing concerns over Australia’s LNG reliability, driven by tighter domestic gas reservation policies and delays in project approvals. These issues have increased supply uncertainty and potential price volatility, prompting Japanese buyers to seek more stable and politically aligned sources like the U.S . More broadly, the deal underscores the rising role of U.S. LNG in Asian markets, with additional U.S. export capacity expected to come online over the next decade.
2
United States/Australia
Artificial Intelligence
What Happened
Amazon.com Inc. announced it will invest $13 billion over the next four years to expand, operate, and maintain its Australian data center infrastructure.
Significance/Outlook
Amazon is making substantial efforts to expand its data center footprint in Australia to satisfy increasing demand for its artificial intelligence and cloud computing services. The investment is Amazon’s largest worldwide technology commitment in Australia, and the funds will be used to support generative AI workloads and increase the capacity of existing servers. In addition, Amazon has pledged to purchase over 170 megawatts of capacity from solar farms in Queensland and Victoria to power its the data center infrastructure and support energy/climate transition targets. Amazon is working to reduce its carbon footprint with the objective of reaching net-zero emissions by 2040.
3
Iran/Israel
Natural Gas
What Happened
Iran has partially suspended production at its South Pars gas field, the world’s largest, after an Israeli airstrike caused a fire in Phase 14, halting 12 million cubic meters per day of gas output.
Significance/Outlook
The strike comes amid heightened tensions following Israel’s broader offensive on Iranian nuclear and military sites. Iran produces around 275 billion cubic meters of gas annually, accounting for 6.5% of global output, but for the most part, that gas is consumed domestically due to export sanctions. Iran shares the field with Qatar, and while the latter’s output from the North Field remains unaffected, Iran’s suspended capacity reduces domestic supply and heightens geopolitical risk, potentially driving up energy prices. In the wake of the escalating Israel-Iran conflict, oil prices spiked by 9%, reflecting broader market concerns about regional energy security. The disruption poses a serious risk to Iran’s energy grid and could further strain an already fragile economy marked by inflation, electricity blackouts, and sustained financial pressure.
4
Nepal/India/Bangladesh
Electricity
What Happened
Nepal has made its debut as a regional energy trader with the export of 40 MW of electricity to Bangladesh via the Indian power grid and another to 80 MW supplied to the eastern Indian state of Bihar.
Significance/Outlook
Grid connectivity between India and Nepal was enhanced under an agreement between the Power Grid Corp. of India and the Nepal Electricity Authority to build high-capacity interconnection infrastructure linking their electricity systems. Nepal has an installed generation capacity of 3,000 MW, 95% of which comes from hydropower. Indian company SJVN is working on a hydropower project in Nepal to add another 900 MW. The Nepalese energy minister said his country could eventually sell 5,000 MW of power on the export market as other hydropower projects are developed. Nepalese exports through the Indian power grid strengthen India’s role as a regional distribution hub. India, which already sends electricity to Nepal, Bangladesh, and Myanmar, is in talks to connect with the Sri Lankan grid.
5
Taiwan/South Korea
Wind Energy
Taiwan's diversification away from coal-fired generation and its continued phaseout of nuclear power will depend on adding renewable energy resources. Taiwan is eager to boost the amount of wind power it can generate offshore. These projects are crucial to Taiwan's renewable energy strategy and will help chipmaker TSMC cut its carbon footprint.
What Happened
Denmark-based Ørsted, the world’s largest offshore wind developer, plans to invest more in Taiwan and South Korea, where it already has projects, rather than expanding to new Asian markets, a senior company executive said.
Significance/Outlook
Ørsted has prioritized Taiwan for future Asian investments due to established frameworks and economically viable projects. Ørsted offshore wind turbines in operation in Taiwan include Formosa 1 with a 128 megawatt (MW) capacity, Yunlin (640 MW), Greater Changhua 1 (605.2 MW), and Greater Changhua 2a (294.8 MW). In addition, Ørsted is developing 920 MW of new offshore wind capacity in Taiwanese waters. Once completed, Ørsted will have a combined offshore wind capacity of almost 2,000 MW in Taiwan. Taiwan’s offshore wind industry will supply power to TSMC, create renewable energy jobs, and draw domestic and international investment. Ørsted’s investments will support South Korea’s green energy transition and attract other long-term investments.