US President Donald Trump has suspended all military aid to Ukraine after a heated exchange with Ukrainian President Volodymyr Zelenskiy, a White House official told Reuters.

The decision marks a significant shift in Washington’s stance on the ongoing war, further straining ties between the two nations.

The suspension follows Trump’s policy shift toward a more conciliatory approach to Russia since taking office in January.

The disagreement between the leaders reportedly escalated during a meeting at the White House, where Trump criticized Zelenskiy for not showing enough appreciation for US military and financial assistance in Ukraine’s conflict with Russia.

“President Trump has been clear that he is focused on peace. We need our partners to be committed to that goal as well. We are pausing and reviewing our aid to ensure that it is contributing to a solution,” the White House official stated, speaking on condition of anonymity, according to Reuters.

Neither the White House nor the Pentagon has provided details on the scope of the aid freeze or the duration of the review.

Ukraine’s government has yet to issue an official response, and the Ukrainian Embassy in Washington has remained silent on the matter.

Trump reiterated his stance on Monday, responding to a report from the Associated Press that quoted Zelenskiy as saying the war’s end remains “very, very far away.”

In a Truth Social post, Trump expressed frustration, calling Zelenskiy’s remark “the worst statement that could have been made,” and suggesting that American support should not be taken for granted.

What will happen to US-Ukraine relations and mineral deals?

The US has provided $175 billion in aid to Ukraine since Russia’s invasion three years ago, according to the Committee for a Responsible Federal Budget.

The Trump administration inherited $3.85 billion in previously approved military assistance, but the ongoing diplomatic tensions have cast doubt on whether these resources will be utilized.

Trump’s latest move goes beyond his previous stance of withholding new aid, as it appears to impact ongoing military deliveries, including munitions and missile systems approved under the Biden administration.

Despite the rift, Trump hinted that a US-Ukraine minerals deal remains a possibility.

European leaders have also floated ceasefire proposals, raising speculation about the future direction of the war.

The Trump administration sees access to Ukraine’s mineral resources as a way for the U.S. to recover some of the billions in financial and military support provided since the conflict began.

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China has vowed to respond to new US import tariffs set to take effect on March 4, escalating trade tensions between the world’s two largest economies.

The Chinese Commerce Ministry condemned the latest round of duties imposed by the Trump administration, calling them an attempt to “shift the blame” and “bully” Beijing over fentanyl-related issues.

The new 10% tariff, which brings cumulative duties on certain Chinese goods to 20%, was announced by US President Donald Trump last week.

The White House has accused China of failing to curb the supply of chemicals used in fentanyl production, a claim Beijing has repeatedly denied.

According to the state-run Global Times, China is preparing countermeasures targeting US agricultural and food products.

The average effective US tariff rate on Chinese imports is projected to rise to 33%, up from approximately 13% before President Donald Trump began his current term in January, according to estimates from Ting Lu, Chief China Economist at Nomura, CNBC reported.

Agricultural products, particularly soybeans, accounted for the largest share of US exports to China, representing 1.2% of total US goods exports, or $22.3 billion, in 2023, according to an analysis by Allianz Research.

Oil and gas followed, comprising 1% of exports at $19.3 billion, while pharmaceuticals ranked third at 0.8%, totaling $15.6 billion.

The report suggests that Beijing could impose both tariff and non-tariff restrictions in retaliation.

The publication, which is affiliated with the Communist Party’s People’s Daily, previously reported on China’s response to European Union tariffs on Chinese electric vehicles.

In an official statement, China’s Commerce Ministry criticized the US for violating World Trade Organization (WTO) rules and disrupting global trade.

“Such measures will not resolve US concerns but will harm China-US economic cooperation and international trade stability,” the ministry stated.

China has urged Washington to withdraw what it calls “unreasonable and groundless” tariff measures, warning that the escalation could have broader consequences for global trade relations.

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Oil prices continued their slide on Tuesday after the Organization of the Petroleum Exporting Countries and allies agreed to stick to their plan of increasing oil output from April. 

Prices also fell, influenced by a combination of geopolitical and economic factors. 

Oil prices: tariffs and geopolitics

The decision by US President Donald Trump to temporarily suspend military aid to Ukraine introduced uncertainty into the global political landscape, contributing to market instability. 

Simultaneously, investors and traders were preparing for the implementation of US tariffs on goods from Canada, Mexico, and China. 

These impending tariffs heightened concerns about potential trade wars and their adverse effects on global economic growth, further dampening market sentiment and putting downward pressure on oil prices.

At the time of writing, the West Texas Intermediate April crude oil contract on the New York Mercantile Exchange was $68.08 per barrel, down 0.4%. The May Brent oil contract on the Intercontinental Exchange was down 0.7% at $71.10 a barrel. 

A White House official confirmed Monday that all US military aid to Ukraine has been paused. 

This follows last week’s Oval Office clash between President Trump and Ukrainian President Volodymyr Zelenskiy.

The market had been expecting a ceasefire in the ongoing war between Russia and Ukraine, which would have likely seen the US ease sanctions against Moscow’s oil exports. 

However, Goldman Sachs analysts argued that Russian oil flows are more restricted by Russia’s OPEC+ production target than by sanctions, and that any easing of the production target may not lead to a substantial increase in oil flows.

OPEC+ decision

“Oil prices are under pressure with ICE Brent settling more than 1.6% lower (on Monday). This follows news that OPEC+ is sticking with plans to gradually increase supply from April by 138k b/d in the month,” analysts with ING Group, said. 

OPEC+ in an official press release late on Monday said the cartel would go ahead with its plan of unwinding some of its voluntary production cuts of 2.2 million barrels per day from April. 

The cuts will be gradually overturned over 18 months, starting in April.

OPEC+ said in the release:

Accordingly, this gradual increase may be paused or reversed subject to market conditions. This flexibility will allow the group to continue to support oil market stability.

“This development hasn’t changed our view on the market, as we already thought supply would return,” ING analysts said. 

The cartel had extended the voluntary production cuts multiple times last year. The cuts were originally scheduled to expire in June 2024. 

However, poor global demand and increasing non-OPEC supply had prompted OPEC to stick with the steep output cuts. 

Oil prices: bears have control

“The daily MACD is in negative territory, but it is not back to the kind of ‘oversold’ levels from which big rallies have previously begun,” said David Morrison, senior market analyst at Trade Nation. 

Overall, it feels as if the bears have control, having driven back prices from the highs made in mid-January. 

At that time, it appeared as though crude had ultimately broken free from a downtrend that had been developing since September 2023.

Crude prices have fallen despite some relatively upbeat manufacturing data from China. 

“Investors have yet to be convinced that the Chinese economy is ready to recover from its disastrous property collapse,” Morrison said. 

The loss of billions of yuan, much of which was owned by private citizens, resulted in a significant loss of confidence. 

This situation is further exacerbated by Trump’s tariffs, with an additional 10% tax on US imports from China set to begin tomorrow.

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The transportation of Iranian oil to China is increasingly relying on smaller, more agile tankers, as US sanctions continue to put pressure on the illicit trade, Bloomberg News reported on Tuesday.

Ship-tracking data reveals that Aframax and Suezmax vessels have seen increased activity on the sensitive route.

Kpler data showed that eight tankers received Iranian crude from supertankers via ship-to-ship transfers in February, with most of them heading to China. 

Shifting ship sizes

This is an increase from two tankers in each of the previous two months, December and January.

The shift towards utilising smaller vessels for transporting crude oil between Iran and China has captured the attention of shipping companies. 

This change is notable, as this particular trade route has traditionally been dominated by very-large crude carriers (VLCCs), which are also referred to as supertankers due to their immense size and capacity. 

The reasons behind this shift could be multifaceted, potentially including factors such as sanctions, port restrictions, or changes in oil production and demand.

Shipbrokers and analysts suggest that the shift towards smaller tankers for transporting crude oil is primarily driven by the need to access shallower Chinese ports. 

These ports, such as Dongying, are increasingly used to receive oil shipments from Iran and Russia. 

The larger tankers traditionally used for these shipments are unable to navigate the shallow waters of these ports, necessitating the use of smaller vessels with shallower drafts. 

This adaptation allows for continued trade and efficient discharge of oil at these key Chinese terminals, ensuring the steady flow of crude oil imports despite the infrastructural limitations of certain ports.

Larger terminals that manage containers and bulk cargoes along with other goods have become cautious of secondary sanctions.

US sanctions impact

The US has significantly increased sanctions against Iran under both the Biden administration and the Trump administration. 

President Trump’s policy of “maximum pressure” against Tehran has led to the blacklisting of numerous ships in recent months. 

This intensified sanctioning has particularly impacted VLCCs, which are more commonly used in the oil trade, than other types of vessels.

Due to stricter regulations surrounding the utilisation of supertankers and a growing reluctance from certain Chinese ports to handle Iranian oil, there has been a marked increase in ship-to-ship transfers of oil at sea. 

This shift has also necessitated a greater reliance on Aframax and Suezmax tankers, which are smaller than supertankers and can more easily navigate certain ports and waterways.

These changes in the logistical handling of Iranian oil highlight the ongoing challenges and complexities of the global oil trade, particularly in regions with geopolitical tensions. 

The use of ship-to-ship transfers and smaller tankers can increase the cost and risk of transporting oil, but it also allows oil to continue flowing despite restrictions and sanctions. 

New strategies emerge

The US sanctions on Tehran have resulted in the development of new strategies to restructure supply chains, ensuring the continued flow of Iranian oil into China.

Exports from ports like Kharg Island used to rely on Iranian-owned VLCCs that sailed directly from the Persian Gulf to China. 

Due to increased scrutiny and clampdowns, ship-to-ship transfers at locations off Malaysia and Fujairah are now more common, masking the cargoes’ origins.

Further, Kpler data showed that before February, ship-to-ship operations off Malaysia almost exclusively involved supertankers, which can carry about 2 million barrels of oil. 

Using multiple transfers and smaller tankers, such as Suezmax vessels (1 million barrel capacity) and Aframax ships (700,000 barrel capacity), can increase overall transportation costs.

The Aframaxes Reston, Brava Lake and Shun Tai received Iranian crude from the sanctioned supertanker Lan Jing (formerly Wen Yao) in three separate ship-to-ship transfers off Malaysia in February, according to Kpler.

Iranian VLCC Derya transferred its cargo to Suezmax Aventus I and Aframax Viola in the same month that three vessels were headed to the ports of Huangdao, Dongying, and Zhoushan, respectively. 

The shipments were destined for Dongjiakou and Dongying, according to the report.

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China’s copper production is projected to reach unprecedented levels in the current year, continuing its upward trajectory. 

However, this growth is not without challenges, as the operational pressures on copper smelters within the country are intensifying, according to a Bloomberg report. 

The increased output is placing a strain on these facilities, potentially leading to operational bottlenecks, maintenance issues, and a need for further investment in capacity expansion. 

Despite these challenges, the overall outlook for Chinese copper production remains positive, driven by strong domestic demand and ongoing investments in the copper industry.

Continuous expansion copper indusrty

The industry has continued to expand its capacity despite a significant drop in processing fees, which are currently operating at a loss. 

This has led to government scrutiny and plans to restrict the development of new facilities. 

However, plants that have already been commissioned will not be affected by these restrictions, and this is expected to result in increased production both this year and the next.

The continued expansion of capacity despite unprofitable processing fees indicates a potential oversupply in the industry. 

This oversupply, coupled with falling fees, has created a challenging economic environment for existing players. 

The government’s intervention, in the form of restrictions on new facilities, aims to address this oversupply and stabilize the market.

However, the exemption for already commissioned plants could lead to a short-term surge in production. 

This is because these plants will be incentivised to operate at full capacity to capitalise on the existing market conditions before any new restrictions take effect. 

Further oversupply of copper

This could further exacerbate the oversupply issue in the short term, potentially leading to even lower processing fees and increased financial pressure on industry players.

Mysteel Global conducted a survey of smelters and forecast that refined copper output in the world’s biggest producer will grow by 4.9% to 12.4 million or 12.45 million tons in 2025. 

This is faster than the 3.1% growth recorded by Mysteel in 2024.

Spot treatment charges for smelting concentrate have dropped drastically, with companies now paying over $20 per ton to process the material. 

This marks the lowest point ever for margins, according to Metal Bulletin. 

This starkly contrasts with the situation in August 2023, when charges were nearly $90 per ton. 

Although term treatment charges (which encompass the majority of China’s imports) remain positive, they are still below the breakeven point.

Despite the downturn in construction, copper consumption in China remains strong due to increased renewable energy use, which more than makes up for the demand lost by the construction sector. 

However, increasing copper production is not a wise decision if companies are losing money on their output.

Competition

The global constraints on concentrate supply have resulted in fierce competition. 

To maintain their local economies and market share, larger, government-owned companies are willing to increase production even if it means incurring losses.

Smelters are implementing operational solutions to lessen their losses. One common strategy is to substitute concentrate with more scrap copper. 

According to Mysteel analyst Li Chengbin, companies are also purchasing ore with a higher gold content or lowering the copper content of their output.

The downtime is expected to increase, with an estimated 3.2 million tons of capacity idled for approximately one month during the annual second-quarter maintenance. 

This is an increase from the 2.7 million tons idled during the same period last year.

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