Crude Oil Week Ahead: Ukraine Tensions, Trade Wars, and NFPs

Key Events

• The EU and UK step in to support Ukraine following the Zelensky-Trump dispute
• Trade war risks between the US, Canada, Mexico, China, and the EU escalate this month
• Chinese Manufacturing PMIs return to expansion territory
• Key US economic indicators are set for release this week, increasing market volatility risks amid market tensions

Geopolitical Uncertainty: Ukraine, US, and Russian Relations

Major geopolitical developments are in focus this month, with the Ukraine-US deal unraveling, EU and UK defense commitments increasing, and trade wars approaching. Following a heated exchange between President Zelensky and former President Trump on Friday, the EU, UK, and Ukraine convened an emergency meeting in London to address the ongoing Russia-Ukraine war.

As the EU moves to reinforce its security and bolster support for Ukraine, downside risks for the euro and upside risks for oil prices may materialize on Monday amid escalating tensions. French President Emmanuel Macron, in a late Saturday interview, stated that he aims to build a “rapid, massive European financing capacity” to strengthen EU strategic autonomy and common defense, presenting a long-term alternative to NATO (Source: Bloomberg).

Trade War Risks and Scheduled Tariffs in March

Beyond the Russia-Ukraine conflict, escalating tariff and trade war tensions between the US, China, Mexico, and Canada, set to take effect starting March 4th, are fueling concerns over economic growth and oil demand uncertainty. While the Russia-Ukraine crisis could temporarily boost oil prices as a geopolitical hedge, the broader negative oil demand outlook and oil’s primary bearish trajectory remain dominant market forces.

Key US Economic Data Releases This Week

Adding to market uncertainty, major US economic indicators will also be released this week, including:

• ISM Manufacturing PMI (Monday)
• ISM Services PMI (Wednesday)
• Non-Farm Payrolls (NFP) report (Friday), which will be closely watched given persistent inflation risks

These releases are expected to impact oil demand projections, shaping near-term price movements.

Technical Analysis: Quantifying Uncertainties

Crude Oil Week Ahead: 3-Day Time Frame – Log Scale

Source: Tradingview

Oil’s support above $68.70 suggests potential for an upside move, particularly if geopolitical risks continue to escalate. Key resistance levels to watch are $71.30, $73.00, and $75.50, where the primary downtrend—in place since 2022—could limit any recovery attempts.

On the downside, immediate support lies at $66 and $64, with a clean close below $64 likely to weaken oil’s structure significantly, potentially driving prices toward the psychological $60 level. A break below $60 would expose $55, aligning with the 0.618 Fibonacci retracement of the 2020–2022 uptrend. In an extreme bearish scenario, prices could drop further toward $49.

Final Thought:  With geopolitical tensions, trade war risks, and key US economic data converging, crude oil faces a highly volatile trading environment in March. While short-term supply risks may support oil prices, weak economic sentiment and trade disruptions could reinforce the long-term bearish trend.

Written by Razan Hilal, CMT

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