WEBVTT - The Threat of Iran’s “No Red Lines” Retaliation 0:00:02.680 --> 0:00:09.880 Bloomberg Audio Studios, podcasts, radio news. Iran Supreme Leader Iotola 0:00:09.960 --> 0:00:13.119 Ali Hamanei has been killed in today's joint attack by 0:00:13.160 --> 0:00:14.280 the US and Israel. 0:00:14.400 --> 0:00:18.400 Our objective is to defend the American people by eliminating 0:00:19.040 --> 0:00:22.240 eminent threats from the Iranian regime. 0:00:22.560 --> 0:00:25.880 What the United States is doing is an act of aggression. 0:00:26.320 --> 0:00:28.720 What we are doing is the act of self defense. 0:00:29.680 --> 0:00:32.200 Targets in Iran, Israel, and elsewhere in the Middle East 0:00:32.200 --> 0:00:35.320 are under attack in an unprecedented escalation in the conflict 0:00:35.360 --> 0:00:36.680 between the US and Iran. 0:00:37.000 --> 0:00:41.760 Would be wonderful if the negotiates really in good conscious, 0:00:41.880 --> 0:00:46.040 good faith, in conscience, but they are not getting there. 0:00:46.320 --> 0:00:49.400 The combat operations come after weeks of negotiations between the 0:00:49.520 --> 0:00:52.520 US and Iran over what remains of its nuclear program. 0:00:52.640 --> 0:00:54.640 This was not an imminent nuclear threat. 0:00:54.880 --> 0:00:57.960 This is a military action over regime change, not over 0:00:57.960 --> 0:00:58.960 the nuclear program. 0:00:59.280 --> 0:01:01.880 Iranian state TV has reported that at least two hundred 0:01:01.880 --> 0:01:04.840 people were killed in the strikes. The country responded with 0:01:04.880 --> 0:01:08.000 missile attacks on Israel and strikes aimed at US assets 0:01:08.000 --> 0:01:10.959 in the region, where at least three US service members 0:01:11.000 --> 0:01:14.120 have been killed. Aron says it sees no red lines 0:01:14.480 --> 0:01:20.720 as it continues to respond with counter strikes. I'm David Gera, 0:01:20.840 --> 0:01:23.199 and this is the big take from Bloomberg News Today. 0:01:23.200 --> 0:01:26.080 On the show, Bloomberg'sjeff Mason and Jumani Berseacci joined me 0:01:26.200 --> 0:01:28.679 to discuss what we know about the timing and goals 0:01:28.800 --> 0:01:31.520 of this weekend strikes and the risks of a widening 0:01:31.640 --> 0:01:39.319 regional conflict. Bloomberg White House correspondent Jeff Mason and Jumna 0:01:39.360 --> 0:01:41.600 Birssecci in Dubai have been here with me all weekend 0:01:41.640 --> 0:01:44.720 long at Bloomberg, along with correspondents across the globe following 0:01:44.720 --> 0:01:47.200 this story. Jeff, we just now heard the tape from 0:01:47.200 --> 0:01:49.800 President Trump announcing this operation. He did it in a 0:01:49.840 --> 0:01:52.960 post on truth social which is an unprecedented move by 0:01:53.000 --> 0:01:56.080 a sitting US president. What has the President said, Jeff, 0:01:56.080 --> 0:01:56.840 about why they. 0:01:56.680 --> 0:01:58.720 Did this now, why they undertook this at this moment, Well, 0:01:58.760 --> 0:02:01.280 the President is pitching the operation is having been in 0:02:01.320 --> 0:02:04.440 response to an imminent threat, and that is something that 0:02:04.560 --> 0:02:07.680 no doubt people are going to question and look into. 0:02:07.840 --> 0:02:12.280 But that is the rationale that he used. His people. Also, 0:02:12.400 --> 0:02:17.440 his top advisors told him that the negotiations that were 0:02:17.520 --> 0:02:21.600 going on in Geneva with Iran about its nuclear program 0:02:21.960 --> 0:02:26.200 essentially came to a point where the United States concluded 0:02:26.240 --> 0:02:30.120 that Iran was not interested in talking about its blistic 0:02:30.200 --> 0:02:34.160 missile program and was still interested in pursuing a nuclear weapon. 0:02:34.280 --> 0:02:36.920 Jeff, what does the US want? Is that clear? Are 0:02:36.960 --> 0:02:39.520 they using a playbook that they deployed in Venezuela just 0:02:39.600 --> 0:02:40.400 a couple months ago. 0:02:40.600 --> 0:02:43.400 Well, it seems very clear that regime changes something that 0:02:43.440 --> 0:02:47.000 they wanted, because the President very directly referred to that 0:02:47.040 --> 0:02:50.720 in his statement when he encouraged people in Iran essentially 0:02:50.720 --> 0:02:53.359 to rise up and take this opportunity to take over 0:02:53.440 --> 0:02:56.360 their government. But they haven't. They been The United States 0:02:56.360 --> 0:02:58.760 in this case have not laid out how they expect 0:02:58.760 --> 0:03:03.280 that to happen. And of course there's some comparisons to 0:03:03.320 --> 0:03:07.040 the Iraq War and this operation, but where those comparisons 0:03:07.040 --> 0:03:09.560 don't continue, at least so far as there are not 0:03:09.680 --> 0:03:13.160 US ground troops in Iran, and so the President may 0:03:13.200 --> 0:03:16.720 have less ability to influence that despite the fact that 0:03:16.880 --> 0:03:17.919 strikes are continuing. 0:03:18.080 --> 0:03:21.880 Jamana, You're witnessing the escalation of this firsthand. You're based 0:03:22.000 --> 0:03:24.200 in Dubai, and I'm curious what things look like there. 0:03:24.240 --> 0:03:26.240 In the wake of these strikes that we've seen, Well, what. 0:03:26.200 --> 0:03:29.840 You need to understand is that a substantial volley of 0:03:29.840 --> 0:03:32.760 missiles and drones have been directed at all of these 0:03:32.760 --> 0:03:36.160 Gulf states. And here I'm talking about the UAE behind 0:03:36.200 --> 0:03:41.120 in Kutar, Kuwait, even Oman who were obviously playing a 0:03:41.160 --> 0:03:45.160 key mediation role in those Geneva discussions. So that was 0:03:45.560 --> 0:03:49.680 also quite a surprising development. And while most of the 0:03:49.760 --> 0:03:52.480 missiles and drones have been intercepted, there are bits of 0:03:52.520 --> 0:03:56.680 debris that actually did cause a significant amount structure of 0:03:56.720 --> 0:04:02.280 infrastructure damage. These are financial centers in the Middle East 0:04:02.360 --> 0:04:07.240 that have prided themselves on political stability and geoeconomic stability 0:04:07.320 --> 0:04:09.800 in the context of a broader region that tends to 0:04:09.840 --> 0:04:14.160 be quite hot and cold, i would say. And so 0:04:14.200 --> 0:04:19.719 the reaction has been pretty and notable in that it 0:04:19.760 --> 0:04:22.080 seems as though many of these Gulf states are losing 0:04:22.160 --> 0:04:25.760 their patients with Iran. So we just had some comments 0:04:25.760 --> 0:04:28.800 from a key advisor to the UAE President and Viz 0:04:29.080 --> 0:04:33.000 warning Iran to return to their senses and to deal 0:04:33.080 --> 0:04:38.320 with their neighbors in a respectful fashion because otherwise, and 0:04:38.400 --> 0:04:40.880 this is a quote, it confirms the narrative that Iran 0:04:41.040 --> 0:04:44.200 is the biggest source of danger in the region. At 0:04:44.240 --> 0:04:47.480 the same time, you know, Iran has stopped one step 0:04:47.520 --> 0:04:52.039 short of going all the way of directly targeting you know, 0:04:52.080 --> 0:04:56.039 residential buildings or civilian infrastructure or oil infrastructure. But you know, 0:04:56.040 --> 0:04:58.360 who's to say that this isn't going to escalate further. 0:04:58.400 --> 0:04:59.800 Jeff, I want to pull back a bit. And there 0:04:59.839 --> 0:05:02.800 was this meeting yesterday of the UN Security Council which 0:05:02.839 --> 0:05:04.800 was called for by the Iranians, and Mike Waltz, the 0:05:04.920 --> 0:05:07.080 US representative at the UN, was there making the case, 0:05:07.240 --> 0:05:10.719 the US case for doing this. We've seen responses from 0:05:10.960 --> 0:05:14.560 other world leaders. European allies are holding an emergency meeting tomorrow. 0:05:14.920 --> 0:05:17.120 I was just talking with Senator Mark Warner of Virginia, 0:05:17.160 --> 0:05:18.920 who sits on the Intelligence Committee. He talked about the 0:05:18.960 --> 0:05:23.120 prospects of this being really a US Israeli mission here 0:05:23.200 --> 0:05:26.680 not enjoying wide support of allies. How do you think 0:05:26.720 --> 0:05:29.720 about the way that the international community has responded to 0:05:29.800 --> 0:05:30.479 what's happened here? 0:05:30.640 --> 0:05:32.840 Well, I think number one, that it's not something that 0:05:32.880 --> 0:05:35.440 President Trump is going to be too concerned about, and 0:05:35.480 --> 0:05:39.719 that's in large part because he during this second term 0:05:39.800 --> 0:05:41.880 and to some extent during his first term as well, 0:05:42.320 --> 0:05:46.840 has upended the international order with his own will and 0:05:46.880 --> 0:05:52.279 with his actions, be it from on the economy, using tariffs, 0:05:52.400 --> 0:05:56.440 or these strikes now in Iran and what was done 0:05:56.440 --> 0:06:00.320 in Venezuela. That said, you know, the international community and 0:06:00.400 --> 0:06:03.240 other countries and allies or enemies for that matter of 0:06:03.279 --> 0:06:06.280 the United States have a right to voice their opinion, 0:06:06.360 --> 0:06:08.280 and the United Nations is a place to do that. 0:06:08.440 --> 0:06:12.360 Whether or not that actually has an impact, though I 0:06:12.440 --> 0:06:13.400 will see. 0:06:14.600 --> 0:06:16.520 After the break, the risk to the Strait of Hormuz 0:06:16.600 --> 0:06:18.880 and to the oil market, and with the US military 0:06:18.880 --> 0:06:29.560 build up, where this could go from here? She want it. 0:06:29.560 --> 0:06:31.520 In the statements that we got from the US President, 0:06:31.560 --> 0:06:33.839 from President Trump, from the Israeli Prime Minister of Benjamin 0:06:33.839 --> 0:06:37.640 at Yahoo, there was this entreaty to Iranians to overthrow 0:06:37.680 --> 0:06:40.799 their government, to put down their weapons, and to seek 0:06:40.800 --> 0:06:44.720 a change of government in Iran. What risks does that introduce? 0:06:44.800 --> 0:06:47.600 The call for that happening in the wake of an 0:06:47.640 --> 0:06:50.040 attack that was undertaken from the air, not on the ground. 0:06:50.200 --> 0:06:53.200 Well, I have to think also that one of the 0:06:53.240 --> 0:06:55.719 reasons that Iran became such a focal point to the 0:06:55.720 --> 0:06:59.080 Trump administration was because of those demonstrations at the beginning 0:06:59.120 --> 0:07:00.760 of the year. That was the as at least in 0:07:00.760 --> 0:07:06.160 twenty twenty six, obviously with the background of Iran's multi 0:07:06.240 --> 0:07:10.240 decade build up of nuclear capabilities. But if you recall 0:07:10.320 --> 0:07:12.960 back in January, president Trump posted that help is going 0:07:13.000 --> 0:07:15.600 to be on the way for the protesters and the 0:07:15.640 --> 0:07:17.920 demonstrators who were taking to the streets, and of course 0:07:18.240 --> 0:07:20.840 we know that they were brutally put down by the 0:07:20.880 --> 0:07:25.080 Iranian regime, and overtime those demonstrations started to peter out, 0:07:25.440 --> 0:07:27.440 and so here we are. You fast forward about a 0:07:27.440 --> 0:07:31.600 month later, and the US have now got involved militarily 0:07:31.800 --> 0:07:36.120 alongside Israel. And it was pretty clear from that original 0:07:36.200 --> 0:07:39.880 video post that President Trump put up that his expectation 0:07:40.320 --> 0:07:42.960 is that the Iranian people should also use this as 0:07:42.960 --> 0:07:45.320 an opportunity to rise up. But of course that comes 0:07:45.320 --> 0:07:48.679 with many challenges. The major risk is that this could 0:07:48.760 --> 0:07:52.080 strengthen the hardliner's hands. They could go down even more 0:07:52.160 --> 0:07:55.280 aggressively on the demonstrators, on the protesters. That could also 0:07:55.880 --> 0:07:59.760 be this push to rally around the flag as well 0:07:59.840 --> 0:08:04.000 and unite their Iranian people about against these external threats 0:08:04.000 --> 0:08:06.800 that are coming through. But then also there's a real 0:08:06.920 --> 0:08:11.200 risk of broader retaliation. And right now, I think the 0:08:11.240 --> 0:08:15.320 Iranian regime sees this as a very fight for their existence, 0:08:15.560 --> 0:08:19.400 and so they're not going to hold back at retaliating, 0:08:19.800 --> 0:08:23.320 either against their own people or against neighboring countries, which 0:08:23.400 --> 0:08:26.239 is what we've seen in the last forty eight hours. 0:08:26.760 --> 0:08:28.200 Jeff, what do we know of what the president is 0:08:28.200 --> 0:08:31.360 watching for here? As you said, his rationale here has 0:08:31.400 --> 0:08:35.800 been changing, somewhat ambiguous. What is he looking for in 0:08:35.840 --> 0:08:36.520 the days to come? 0:08:36.679 --> 0:08:40.400 Well, certainly one of their primary objectives is to prevent 0:08:40.920 --> 0:08:43.880 Iran from being able to develop a nuclear weapon, and 0:08:43.920 --> 0:08:46.920 that's another thing that he talked about in his video statement. 0:08:47.080 --> 0:08:51.079 So the military campaign will no doubt be focused on 0:08:51.520 --> 0:08:56.479 that and on the resources and infrastructure that is available 0:08:57.480 --> 0:09:00.280 in Iran that could potentially be used for that and 0:09:01.360 --> 0:09:04.480 weapons programs, et cetera. Obviously, we know that they targeted 0:09:05.120 --> 0:09:10.160 Iranian leadership, and no doubt he'll be watching how around response. 0:09:10.720 --> 0:09:13.239 We know, as we were just discussing that the retaliation 0:09:13.360 --> 0:09:17.120 is happening. Does that change any military calculations for President 0:09:17.160 --> 0:09:19.080 Trump the United States? How do they respond to that? 0:09:19.520 --> 0:09:22.160 I imagine they're watching all of those things, Jana. 0:09:21.920 --> 0:09:23.800 Let me ask you about the oil market. What this 0:09:23.920 --> 0:09:26.160 means for that the Strait of Hormu is a key 0:09:26.200 --> 0:09:28.480 part of this conflict, at choke point where nearly twenty 0:09:28.520 --> 0:09:31.360 percent of the world's oil is transported. What is this 0:09:31.559 --> 0:09:34.120 likely to mean for oil prices in the days to come. 0:09:34.280 --> 0:09:36.520 Well, even at the run up to this, oil prices 0:09:36.640 --> 0:09:39.400 had been lifted by a certain amount of what analysts 0:09:39.440 --> 0:09:42.640 call geopolitical premium because there was an expectation that a 0:09:42.720 --> 0:09:45.480 strike could happen at some point, so we were already 0:09:45.520 --> 0:09:48.880 up almost around twenty percent. We'll see where the market 0:09:48.920 --> 0:09:52.800 opens up. But to your point, the Strait of Hormas 0:09:52.960 --> 0:09:57.120 is a key passageway for seaborne oil and as of now, 0:09:57.160 --> 0:09:59.760 if you look at the traffic over the weekends, according 0:09:59.760 --> 0:10:04.000 to Kepler they have their data analytics, it suggests that 0:10:04.040 --> 0:10:08.320 the flow of tankers is down around by seventy five 0:10:08.360 --> 0:10:11.800 to eighty percent. So essentially what's happening is tankers and 0:10:11.920 --> 0:10:15.200 vessels are avoiding going through the straits, so a significant 0:10:15.320 --> 0:10:18.480 drop in overall activity. At the same time, you know, 0:10:18.520 --> 0:10:21.400 one thing that you need to think about is the 0:10:21.440 --> 0:10:24.760 oil that passes through that Strait. Most of it ends 0:10:24.840 --> 0:10:27.000 up going to Asia. So this is oil that's coming 0:10:27.000 --> 0:10:29.360 through from the Gulf countries, from Iran, but also other 0:10:29.400 --> 0:10:33.800 countries as well, Saudi Arabia, other GCC nations. The main 0:10:33.880 --> 0:10:36.439 buyer there is going to be China, and so if 0:10:36.600 --> 0:10:39.960 that oil isn't able to pass through the Straits, then 0:10:40.040 --> 0:10:42.600 obviously the oil has to come from somewhere else. 0:10:42.840 --> 0:10:45.520 Jaman, I understand that OPEC plus that group of nations 0:10:45.520 --> 0:10:48.079 that produce oil weighing an increase in production as a 0:10:48.080 --> 0:10:48.520 result of this. 0:10:48.880 --> 0:10:52.120 Yeah, that's true. So they actually had their regular meeting 0:10:52.240 --> 0:10:54.679 today and on the back of that they announced an 0:10:54.679 --> 0:10:57.800 increase of production of more than two hundred thousand barrels 0:10:57.800 --> 0:11:01.560 a day. That was probably not going to happen in 0:11:01.600 --> 0:11:04.880 the absence of the weekend's events, because the last couple 0:11:04.920 --> 0:11:07.920 of months they've just paused with their production output. In 0:11:08.000 --> 0:11:09.920 Q four of last year, they were averaging around one 0:11:10.000 --> 0:11:13.160 hundred and thirty seven thousand extra barrels a day put 0:11:13.200 --> 0:11:15.960 back to the market, But in light of recent events 0:11:15.960 --> 0:11:19.080 and in light of perhaps a tightening of the market, 0:11:19.440 --> 0:11:23.240 they've opted to go with this extra supply increase, which 0:11:23.280 --> 0:11:27.440 also signals that at least a couple of countries within 0:11:27.480 --> 0:11:30.920 OPI plus Saudi Arabia and UAE, who've been pushing anyway 0:11:31.200 --> 0:11:37.320 to increase OPEK share the global share of oil, are 0:11:37.440 --> 0:11:39.679 using this as an opportunity to get more of their 0:11:39.679 --> 0:11:40.760 oil back on the market. 0:11:41.000 --> 0:11:42.320 Jeff, I want to end with what might be an 0:11:42.320 --> 0:11:44.760 off ramp for the president here. In the run up 0:11:44.800 --> 0:11:46.440 to this, there was a school of thought that because 0:11:46.440 --> 0:11:48.680 this might push up oil prices, maybe the president would 0:11:48.720 --> 0:11:51.800 avoid doing this. That he is under pressure to talk 0:11:51.840 --> 0:11:54.000 more about cost of living in affordability, and if gas 0:11:54.000 --> 0:11:56.360 prices were to rise, that would be a challenge to 0:11:56.679 --> 0:12:00.240 him and his party going into the midterm elections. How 0:12:00.320 --> 0:12:01.960 is he thinking about that and how much of a 0:12:02.000 --> 0:12:03.959 forcing mechanism do you think that's likely to be here 0:12:04.000 --> 0:12:05.559 as he tries to game out a path forward. 0:12:05.679 --> 0:12:08.120 Well, number one, he can't go back, so he's done 0:12:08.160 --> 0:12:11.320 it now and there's no way of erasing that. And 0:12:11.360 --> 0:12:13.360 the impact that it's going to have on the economy 0:12:13.400 --> 0:12:16.280 and on oil prices is still TBD. I think that'll 0:12:16.280 --> 0:12:18.600 be very interesting to watch. Certainly, you're right to say 0:12:18.600 --> 0:12:21.199 that the political risk here for him in terms of 0:12:21.240 --> 0:12:24.400 the midterms is it potentially robs him of one of 0:12:24.400 --> 0:12:26.840 his favorite talking points, which is that he likes to 0:12:26.840 --> 0:12:30.600 take credit for low gasoline prices, and gasoline prices are 0:12:30.679 --> 0:12:34.839 absolutely something that voters watch because it's a part of 0:12:34.880 --> 0:12:38.560 their daily lives. And when consumers see their prices going up, 0:12:38.640 --> 0:12:40.360 be it at the grocery stores or be it at 0:12:40.400 --> 0:12:43.400 the pump, they remember that at the polls. And is 0:12:43.440 --> 0:12:46.360 that an off ramp? I mean, does it impact whether 0:12:46.400 --> 0:12:49.920 these strikes continue? I think the answer to that is 0:12:50.000 --> 0:12:53.199 no at this point, because the United States is all 0:12:53.200 --> 0:12:53.680 in and. 0:12:53.720 --> 0:12:56.280 Jaman, what are the expectations in the region for where 0:12:56.320 --> 0:12:57.080 this goes from here? 0:12:57.280 --> 0:13:01.560 I think it's very difficult for anyone to have really 0:13:01.600 --> 0:13:04.000 good foresight on how this is going to play out. 0:13:04.200 --> 0:13:07.080 The hope I think from the US side is that 0:13:07.280 --> 0:13:11.080 the ongoing attacks will either lead the Iranian regime to 0:13:11.200 --> 0:13:16.360 fully collapse on itself or eventually for it to capitulate. 0:13:16.480 --> 0:13:19.240 And the capitulation will only come if they have been 0:13:20.280 --> 0:13:23.720 decapitated at a senior level in terms of top echelon 0:13:23.840 --> 0:13:26.560 being taken out and a military level in terms of 0:13:26.600 --> 0:13:32.360 their actual ballistic missile arsenal their launchers being so severely 0:13:32.440 --> 0:13:36.400 damaged that they can't continue lobbying all of these missiles 0:13:36.400 --> 0:13:40.520 and drones into the region, into the GCT countries and 0:13:40.559 --> 0:13:43.840 into Israel. The Prime Minister is really Prime Minister Natanyahu 0:13:44.000 --> 0:13:46.880 was just speaking as well and saying that they also 0:13:47.000 --> 0:13:50.000 expect to continue with these attacks over the next coming days. 0:13:50.640 --> 0:13:53.119 And if anything, it will say from the Gulf State's perspective, 0:13:53.160 --> 0:13:55.600 the fact that they've been drawn into this, the fact 0:13:55.640 --> 0:13:58.600 that it has been so destabilizing for their own economies, 0:13:58.640 --> 0:14:01.960 has probably hardened their own resolve, and for a while 0:14:02.040 --> 0:14:06.560 they had been seeking to have not necessarily the strongest 0:14:06.600 --> 0:14:11.319 relations with Iran, but at least have operational diplomatic relationships. 0:14:11.320 --> 0:14:13.880 This could be a huge game changer for the region. 0:14:14.000 --> 0:14:16.480 And one just last development that I would bring up 0:14:16.520 --> 0:14:19.760 as well is a phone call took place yesterday on 0:14:19.840 --> 0:14:23.520 Saturday between the Saudi Crown Friends Mohammad bin Seman and 0:14:23.560 --> 0:14:27.000 the UAE President MBZ. The two leaders have not spoken 0:14:27.160 --> 0:14:31.040 in a couple of months over disagreements around the forward 0:14:31.040 --> 0:14:34.760 path of Yemen. What this clearly shows you is that 0:14:35.200 --> 0:14:38.680 the whole region and the Gulf States are uniting at 0:14:38.680 --> 0:14:41.600 this point in time to bring down the temperature to 0:14:41.720 --> 0:14:45.280 de escalate and to ensure that things really don't get 0:14:45.280 --> 0:14:45.920 out of control. 0:14:48.560 --> 0:14:50.840 This is the Big Take from Bloomberg News. I'm David Gurra. 0:14:51.080 --> 0:14:54.080 This is a developing story. We're live blogging at Bloomberg 0:14:54.080 --> 0:14:56.440 dot com with the latest from across the globe. We 0:14:56.480 --> 0:14:59.400 have a special Bloomberg subscription offer for podcast listeners at 0:14:59.400 --> 0:15:02.920 Bloomberg dot dot com Slash Podcast Offer. Thanks for listening. 0:15:03.120 --> 0:15:03.960 We'll be back tomorrow.