Due to slow economic growth and the risk of a trade war, oil prices have fallen for the second consecutive week

We have just experienced a very turbulent week, culminating in what can only be described as an unexpected meeting at the White House on Friday. Without delving too deeply into analysis, it is clear that the geopolitical narrative is becoming increasingly complicated, and when it comes to Ukraine, we are still far from any resolution. All of this raises the level of risk in the markets, increases uncertainty, and leads to heightened price volatility for most commodities.

When we add to this the upcoming events in the current week, such as the start of tariff implementation for Mexico and Canada, the ECB meeting on monetary policy and interest rates, and in the first half of March, the USDA report and CPI inflation data in the U.S., it is clear why financial and commodity markets are currently as they are. Furthermore, the commodity market will focus on the weather in South America (wet in Argentina and dry in Brazil), on export demand for U.S. goods, on the movement of the U.S. dollar, and on early spring planting in the Northern Hemisphere. Given the decline in the financial, crypto, and commodity markets, we can say that the initial phase of ‘Trump’s honeymoon’ has ended.

Otherwise, February was a mixed month for commodity markets. U.S. natural gas was a significant winner for the month due to cold temperatures in the U.S., while the often-mentioned orange juice was the commodity with the largest price drop for the month due to slowing demand and position liquidation by funds. Bloomberg’s commodity index—a basket of agricultural, energy, and metal futures markets—rose only 0.4 percent during the month.

Headlines regarding U.S.-Ukraine trade in the form of aid in exchange for minerals contain one crucial element that is taken for granted. It seems that many people, not just Trump, are convinced that Ukraine is rich in so-called rare earth elements or trace elements. This is a complete nonsense. Does it have coal, iron ore, and some other resources? Of course. But does it contain a wealth of trace elements? No. Certainly not in quantities that would justify contracts worth $500 billion. Ukraine does not have commercial mines for trace elements, nor is it on the list of countries with large reserves of them. The rare precious metals market is dominated by China on the supply side. The value of global production of rare elements, including that of China, amounts to no more than $15 billion annually (which is equivalent to the value of oil production for two days).

Ukraine in the EU? The hypothesis of Ukraine’s accelerated entry into the EU has elicited a separate reaction from Russia, which stated that it has no objections. However, this perspective could have serious economic and social consequences for Europe. Ukraine, a war-torn country with a fragile economy, bases a large part of its resources on the agricultural sector. Its entry into the EU and the consequent flooding of the market with cheap agricultural products will lead to a crisis in the agricultural sectors of many member states, destroy competitiveness, and reduce funds allocated for European economic assistance.

Tensions Remain High

On global markets, oil prices have fallen for the second consecutive week due to market concerns about declining demand and the slow growth of the world’s largest economies, as well as the risk of a trade war. The price of a barrel on the London market slipped 1.7 percent last week, while on the U.S. market, the barrel decreased by 0.9 percent. Regardless, WTI oil prices are below $70/bbl, and Brent oil prices are dangerously close to the $70/bbl level. We will see if oil falls below this psychological barrier. The U.S. economy shows signs of slowing growth, and the Chinese economy is not growing as quickly as expected.

Additionally, today, tariffs of 25 percent on imports from Canada and Mexico, as well as an additional 10 percent tariff on imports from China, have come into effect. He also indicated that he could soon impose tariffs of 25 percent on imports from the EU, and as the European Commission announced a swift and decisive response, traders fear a trade war that could negatively impact the growth of the entire global economy, and thus demand. For this reason, as well as the announcement of the normalization of supply from Iraqi Kurdistan, OPEC+ members are considering whether to increase supply from April, as they announced, or to continue with the current policy of limiting deliveries.

European natural gas futures prices (TTF) rose at the beginning of the new week by more than 5 percent to €46.5/MWh, reversing some losses from a 17.4 percent drop in February, the largest monthly decline in the past year. Prices rose after tensions between U.S. President Trump and Ukrainian President Zelensky cast doubt on a potential peace agreement between Russia and Ukraine. Hopes for a renewed influx of Russian gas into Europe faded after their meeting made no progress. On February 10, gas prices reached a two-year high of €59/MWh due to falling stocks driven by colder weather, reduced wind power, and the loss of Russian gas through Ukraine.

Although the withdrawal has recently slowed with higher temperatures, traders are preparing for possible cold weather later in March. Some forecasts indicate the danger of sudden stratospheric warming, which could bring cold air to Northern Europe and stimulate demand. Meanwhile, tensions remain high as Russia reported that it is seeking Turkey’s assistance following drone attacks on the TurkStream pipeline. Germany’s gas reserves are approaching a critical threshold of 30 percent. The potential return of Russian gas will not help either. Technological chains are being reorganized to exclude Germany. They are being replaced by Russian fertilizer producers, Chinese and Indian metal and chemical manufacturers. When it comes to oil and gas, it is interesting to note that Japan’s Japex, the largest oil and gas company in Japan, is leaving the green sector and returning to investments in oil and gas. This is yet another company that has made this move.

Possible New Tariffs

Agricultural product prices fell sharply in the last week of February. Bloomberg’s agricultural index fell 5.3 percent on a weekly basis. The main reasons for this are poor macroeconomic outlooks, weak U.S. export data, the announcement of new tariffs, and bearish seasonal signals. Agricultural commodity markets reacted to the published estimates of planted areas in the U.S. However, these estimates do not come from producer inputs or the industry in general, but are estimates of area derived solely from economic modeling. The USDA’s May report—the first to contain balances for the 2025/26 market year—will include planted areas based on the agency’s survey of producers’ planting intentions, which will be conducted in early March, with data to be published on March 31.

It is interesting to look at the top 10 countries by the value of natural resources. Number one is convincingly Russia, which is rich in coal, gas, oil, timber, and rare metals, with estimated values exceeding $75 trillion. Following it is the U.S., rich in coal, timber, gas, gold, and copper, with estimated values of $45 trillion. The top three is closed by Saudi Arabia, based on oil and gas reserves, with estimated values of $34 trillion. After them follow Canada, Iran, China, Brazil, Australia, Iraq, and finally Venezuela. In terms of commodities, these are mainly oil, gas, timber, gold, copper, and other precious, industrial, and rare metals. In the context of geopolitical changes and the renewed importance of controlling raw materials and commodities, this will be very important for the future.

The largest mining companies in the world are Australia’s BHP Group, followed by China’s China Shenhua Energy, and the top three is closed by Australia’s Rio Tinto. In the top 10, there are also three American companies, Swiss Glencore, and one company each from Canada, Saudi Arabia, and Indonesia. These are all companies with a market capitalization of over $40 billion, with BHP Group being the largest at $125 billion.

Copper futures have held steady and risen to $4.6/lbs, the highest in over two weeks, as markets continue to assess the impact of President Trump’s tariffs on U.S. production capacities. The U.S. President has initiated an investigation into potential new tariffs on copper imports, pushing market players into a position for the possibility of imposing duties by the end of the year, as the government was expected to immediately impose tariffs on other base metals, including aluminum.

Such a move would increase dependence on domestic capacities, which are limited to only two large smelters, as the U.S. imports nearly half of its copper. In China, supply has remained ample. Processing fees for Chinese smelters have remained below zero, reflecting a significant scale of excess capacity in refined copper production in the leading producer. Additionally, copper stocks in China have risen to the threshold of 270,000 tons, three times higher than at the beginning of the year.