WEBVTT - Oil Steadies, Trump Seeks Xi Summit Delay

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>Welcome to the Daybreak Asia podcast. I'm Doug Chrisner. The

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<v Speaker 2>crude oil market remains volatile given a lot of the

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<v Speaker 2>uncertainty around shipments leaving the Strait of horn Mooves. This

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<v Speaker 2>narrow waterway has been effectively closed by Iran. Prices were

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<v Speaker 2>in retreat in the New York session on the bet

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<v Speaker 2>that oil tankers will soon be able to traverse the strait,

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<v Speaker 2>and some of that optimism seem to come from ship

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<v Speaker 2>tracking data showing a Pakistan flag tanker clearing the Strait

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<v Speaker 2>of horn Moos. For a closer look, I'm joined by

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<v Speaker 2>Bloomberg's Paul Dobson. Paul is Executive editor for Asia Markets.

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<v Speaker 2>Thank you for being here from our studios in Singapore.

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<v Speaker 2>I just wanted to add that point. I know there

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<v Speaker 2>are a lot of threads to bring together here, Paul,

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<v Speaker 2>but if you look at the move higher right now

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<v Speaker 2>in oil prices, which is to say negative sentiment, is

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<v Speaker 2>there a way that you can help me understand what's

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<v Speaker 2>driving this price action?

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<v Speaker 3>Yeah, Hi, Doug. I think that the market will point

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<v Speaker 3>to a few different reasons for the lower prices. I

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<v Speaker 3>think number one is that release from the strategic reserves

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<v Speaker 3>by the ITEA, and the way that that's structured. Think

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<v Speaker 3>in the US in particular, it's in exchange, so it's

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<v Speaker 3>sort of borrowing from the future in a way, and

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<v Speaker 3>so in order to price that you have lower short

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<v Speaker 3>term prices and higher longer term prices once that sort

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<v Speaker 3>of gets put back into storage later on. On top

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<v Speaker 3>of that, we do have some tankers making their way

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<v Speaker 3>out of the Strait of Hormus and heading to various locations.

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<v Speaker 3>The Iranian crude is continued to flow. I think that

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<v Speaker 3>Trump has said that they've been allowing that and some

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<v Speaker 3>other tankers, for example, going to Pakistan. You have the

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<v Speaker 3>availability of the Russian crewed coming back onto the market

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<v Speaker 3>after Trump allowed a waiver on the sanctions there. So

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<v Speaker 3>that's also helping some countries that are particularly strapped to

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<v Speaker 3>get their hands on some fuel. And you have the

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<v Speaker 3>sort of alternative supply routes. So we know that there's

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<v Speaker 3>a large cluster of tankers waiting to pick up crude

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<v Speaker 3>on the Saudi coast in the Red Sea rather than

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<v Speaker 3>in the Strait of Horror Moos. So I think it

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<v Speaker 3>all points to the idea that all those supplier is

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<v Speaker 3>going to be reduced, It's not going to be completely

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<v Speaker 3>kind of halted from the oil producers in the Strait

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<v Speaker 3>of Hormuz area. That said, I think I would be

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<v Speaker 3>cautious about getting too it carried away or too excited

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<v Speaker 3>about this. You know, we do have prices still around

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<v Speaker 3>one hundred dollars a barrel, and we do still have

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<v Speaker 3>those supply curbs and impingements everywhere. And the fact of

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<v Speaker 3>the matter is that the longer this goes on, the

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<v Speaker 3>more stockpiles around the world are going to get drained,

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<v Speaker 3>the scarce of oil is going to become, the higher

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<v Speaker 3>the price is going to go.

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<v Speaker 2>No doubt about that. And we talk a lot about

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<v Speaker 2>the volatility being linked to headline risk, and I'm getting

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<v Speaker 2>a report on the Bloomberg terminal. Now, this is a

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<v Speaker 2>news report coming out of the UAE that the government

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<v Speaker 2>has closed its airspace to some extent early in the

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<v Speaker 2>morning on Tuesday. So when you get a headline like

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<v Speaker 2>that and I'm looking at the knee jerk response and

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<v Speaker 2>the oil market is to push prices higher, it just

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<v Speaker 2>kind of addresses the level of anxiety in the market

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<v Speaker 2>right now.

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<v Speaker 3>It does, and we saw in Dubai yesterday, we had

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<v Speaker 3>the blaze near the airport that disrupted flights for a

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<v Speaker 3>while already. And the fact that the Iranian seem to

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<v Speaker 3>be targeting more energy infrastructure is also a traveling development

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<v Speaker 3>that is causing more headaches and again sort of ratcheting

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<v Speaker 3>up the stresses in the oil and the energy markets.

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<v Speaker 3>Now you do have Trump as well talking about this

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<v Speaker 3>idea of can he put together a coalition that will

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<v Speaker 3>help to provide military sort of escorts, navy escorts to

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<v Speaker 3>get more tankers out of the Strait of hor Mews.

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<v Speaker 3>And it doesn't seem to be getting a very enthusiastic

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<v Speaker 3>reception in global markets or in global geopolitical space so far.

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<v Speaker 3>I think you have Japan not looking very enthusiastic, South

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<v Speaker 3>Korea saying it's thinking about it. You do have France

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<v Speaker 3>saying that indicating that they may be willing to help

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<v Speaker 3>out they think the UK was offering much support either.

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<v Speaker 3>I mean, you can see it both ways, and as

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<v Speaker 3>well on that respect, because these are countries and are

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<v Speaker 3>more dependent on getting that crewed into the global markets

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<v Speaker 3>probably than the US is because the US s energy independence.

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<v Speaker 3>But on the other hand, people are saying well, you

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<v Speaker 3>started this, well, you know, you sorted out. So maybe

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<v Speaker 3>if this goes on longer term, it will be possible

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<v Speaker 3>that you will get to see some of those sort

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<v Speaker 3>of common voice going on. But it's extremely dangerous and precarious,

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<v Speaker 3>and it wouldn't take too many accidents, let's say, for

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<v Speaker 3>that to be halted again. So the idea that that's

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<v Speaker 3>going to really help supply the market anytime scene seems

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<v Speaker 3>to be a little bit optimistic.

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<v Speaker 2>And at the same time, Paul, we have this apparent

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<v Speaker 2>disagreement between the US and the UK as to whether

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<v Speaker 2>or not Iran has been mining the Strait of Hormuz.

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<v Speaker 2>The UK Defense Secretary John Healey was saying earlier it's

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<v Speaker 2>becoming clear that Iran was laying explosives, but from the

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<v Speaker 2>US side, Defense Secretary Pete Hegseth was saying, there's not

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<v Speaker 2>clear evidence that that's the case. This is still a

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<v Speaker 2>very very dangerous setting, is it not?

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<v Speaker 3>Absolutely? I think the tanker track of data seems to

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<v Speaker 3>indicate that the ships that have been leaving the Strait

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<v Speaker 3>of Hormus recently have hugged very closely to the Iranian coastline.

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<v Speaker 3>So some people looking at those movements are suggesting that

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<v Speaker 3>might be bigause of mine activity across the more usual

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<v Speaker 3>shipping routes, but again it could be sort of a

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<v Speaker 3>ruse in order to make it look that way as well.

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<v Speaker 3>So I don't think we have any particularly from clarity

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<v Speaker 3>on that. It is a very narrow channel and if

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<v Speaker 3>there are minds in there, then they would need to

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<v Speaker 3>be cleared before you can get large numbers of ships

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<v Speaker 3>flowing again backwards and forwards, and so that would make

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<v Speaker 3>the situation all the more dangerous. So yeah, I mean,

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<v Speaker 3>we have a lot of stresses and tensions and precarious

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<v Speaker 3>arrangements going on right now, Doug. And you know, the

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<v Speaker 3>KRUDE all market, as you said, is back up again

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<v Speaker 3>a little bit already this morning in asious hours, and

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<v Speaker 3>so that tension looks like it's going to continue and

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<v Speaker 3>to percolate across the rest of global markets as well

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<v Speaker 3>as a result.

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<v Speaker 2>And what's unmistakable is that we've got a pretty powerful

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<v Speaker 2>rally going on in South Korea right now. And I'm

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<v Speaker 2>just going to guess that this is tied to some

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<v Speaker 2>of the commentary that we heard from Jensen Huang, the

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<v Speaker 2>CEO of Nvidia, saying tonight in the US that he

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<v Speaker 2>was expecting to see the company generate at least a

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<v Speaker 2>trillion dollars in chip sales through the end of twenty

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<v Speaker 2>twenty seven. So this just kind of reaffirms the optimism

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<v Speaker 2>maybe some people have as it relates to artificial intelligence.

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<v Speaker 3>Yes, that's right, and that had taken a bit of

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<v Speaker 3>a back seat as we'd focus so much on the

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<v Speaker 3>situation in the Middle East. So it's good to hear

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<v Speaker 3>something a bit more positive about the chip in the

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<v Speaker 3>AI industry. I think was it that the mag seven

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<v Speaker 3>had entered a correction at the start of this week,

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<v Speaker 3>and so we have seen a little bit of a

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<v Speaker 3>rebound in those companies now, and yeah, that's definitely feeding

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<v Speaker 3>into the Asia market environment. I think there were a

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<v Speaker 3>couple of deals in the last twenty four hours as well,

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<v Speaker 3>the in AI space, and so yes, that had become

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<v Speaker 3>a little bit of an underappreciated theme that South Korea

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<v Speaker 3>had obviously had a lot of what as the war

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<v Speaker 3>broke out, and very steep losses in a couple of

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<v Speaker 3>days of trading at least, and so maybe they have

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<v Speaker 3>those sort of value seekers coming back out and eyeing

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<v Speaker 3>the big chip stock. Samsung sk Heinix. I'm thinking that

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<v Speaker 3>there might be an opportunity here to pick them up

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<v Speaker 3>at a little bit of a discount.

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<v Speaker 2>So before I let you go, I want to get

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<v Speaker 2>your thoughts on what we heard today from President Trump.

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<v Speaker 2>He has requested a delay of his trip to China.

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<v Speaker 2>He had been scheduled, obviously to meet with Shi Jinping

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<v Speaker 2>at the end of the month, but mister Trump asked

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<v Speaker 2>to put it off for a month or so because

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<v Speaker 2>of the war in Iran. Give me your sense of

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<v Speaker 2>what people are saying about how this war is impacting

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<v Speaker 2>relations between the US and China so far.

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<v Speaker 3>I would probably say that they're trying to look the

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<v Speaker 3>other way on both sides when it comes to the

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<v Speaker 3>US China sort of relationship. I mean, Chrump evenflated the

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<v Speaker 3>idea that maybe China would like to send some ships

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<v Speaker 3>as well to help with the extraction of tankers from

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<v Speaker 3>the straight up holl News. I'm not sure that China

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<v Speaker 3>wants to go there, but the backdrop had so far

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<v Speaker 3>been very positive in terms of the relationship between Trump

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<v Speaker 3>and She. Between the US and China, that sort of

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<v Speaker 3>truce that had been struck after we saw the big

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<v Speaker 3>escalation of the tariffs, you know, in April, May June

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<v Speaker 3>last year, and I think that you know, there were

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<v Speaker 3>even meetings between some of the officials over the past

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<v Speaker 3>week that on the whole seems to come out relatively favorably.

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<v Speaker 3>So the idea that this meeting has been delayed is

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<v Speaker 3>probably you know, Trump has occupied with other things, bigger

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<v Speaker 3>things that he needs to worry about right now, and

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<v Speaker 3>so perhaps from both sides perspective, it actually makes sense

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<v Speaker 3>to wait a second see how that situation evolves before

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<v Speaker 3>talking about what happens next. In the terms of the

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<v Speaker 3>US China relationship, what we did see yesterday was su

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<v Speaker 3>been prices falling. The idea being the you know, if

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<v Speaker 3>Trump and she don't meet, then maybe there won't be

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<v Speaker 3>some more purchases of US agricultural products from China agreed

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<v Speaker 3>to and so you know, the market does have a

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<v Speaker 3>little bit of a reaction to that, but it seems

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<v Speaker 3>like it's more of a delay rather than a sort

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<v Speaker 3>of disagreement at this point.

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<v Speaker 2>Inside, Okay, Paul, thank you so very much. We'll leave

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<v Speaker 2>it there. Bloomberg's Paul Dobson. Paul is executive editor for

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<v Speaker 2>Asia Markets. Joining us here on the Daybreak Asia Podcast.

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<v Speaker 2>Welcome back to the Daybreak Asia Podcast. I'm Doug Prisner.

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<v Speaker 2>President Trump has requested a delay of his trip to Beijing.

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<v Speaker 2>He had been scheduled to meet with President Chi chen

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<v Speaker 2>Ping at the end of the month, but he's asking

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<v Speaker 2>to put it off for a month or so because

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<v Speaker 2>of the war in Iran. And at the same time,

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<v Speaker 2>President Trump reiterated an appeal for help from other nations,

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<v Speaker 2>including China, to help secure this straight of horror moves. Now,

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<v Speaker 2>several nations have already said they're not getting involved. In

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<v Speaker 2>That list includes Spain, Italy, Japan, and Australia. And that's

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<v Speaker 2>where we begin our conversation with Mara Rudman. Mara is

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<v Speaker 2>a practitioner Senior Fellow at the University of Virginia Miller Center.

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<v Speaker 2>She spoke with Bloomberg TV host Heidi Stroud, Watts and Sherry.

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<v Speaker 4>On the narratives myriad of fuss moving at this point.

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<v Speaker 4>But it was quite interesting that we did see at

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<v Speaker 4>one point President Trump trying to draw in a number

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<v Speaker 4>of countries and allies to help him, not with the

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<v Speaker 4>war effort necessarily, but certainly the effort to try and

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<v Speaker 4>restore energy security and one of those sort of reach

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<v Speaker 4>outs was directly to China. Is there anything that Beijing

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<v Speaker 4>has to gain to become further involved in what's going

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<v Speaker 4>on in the Middle East?

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<v Speaker 5>Probably not, And I believe that that is a calculation

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<v Speaker 5>that China is making. They while all global energy markets

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<v Speaker 5>are obviously affected by what is happening actions against Iran

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<v Speaker 5>and with the closure of the almost the closure of

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<v Speaker 5>the state of Hormus, China and Russia are two countries

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<v Speaker 5>that are, if not benefiting, certainly hurting much less than

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<v Speaker 5>all of the countries in the region, than Europe, then

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<v Speaker 5>pretty much everywhere else in the world. Part of that

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<v Speaker 5>with China is because it seems that they are still

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<v Speaker 5>getting some oil from Iran, that the ships that are

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<v Speaker 5>making it through the Strait of Hormus are Iranian ships

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<v Speaker 5>sending oil to China, so they don't feel the same

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<v Speaker 5>pressure that other countries might. And even if they did,

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<v Speaker 5>it's not clear that they would think it was wise

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<v Speaker 5>to respond to President Trump's request, and I put request

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<v Speaker 5>in quotes in an affirmative manner.

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<v Speaker 2>Mara.

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<v Speaker 4>Even as we speak, we're getting more updates when it

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<v Speaker 4>comes to the situation in the Middle East. We've seen

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<v Speaker 4>an announcement from the UAE saying the airspace closure has

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<v Speaker 4>is a temporary closure of its airspace. According to the

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<v Speaker 4>news agency there, the official news agency, we're also hearing

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<v Speaker 4>that it's a quote exceptional precautionary measure that's been taken

0:13:16.920 --> 0:13:20.240
<v Speaker 4>to close that UAE airspace. We know that even in

0:13:20.240 --> 0:13:23.080
<v Speaker 4>the last few hours we had the drone strike that

0:13:23.120 --> 0:13:27.040
<v Speaker 4>affected the ue gas fields and the suspension of operations there.

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<v Speaker 4>So things continue to play out, even as it's a

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<v Speaker 4>bit of alleviation when it comes to how markets are

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<v Speaker 4>feeling about oil prices. But I do wonder are we

0:13:35.320 --> 0:13:38.880
<v Speaker 4>learning much more about where we're at in these operations,

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<v Speaker 4>how close we are to any sort of conclusion. Is

0:13:41.559 --> 0:13:44.880
<v Speaker 4>there any possibility for an off ramp, because it doesn't

0:13:44.880 --> 0:13:47.120
<v Speaker 4>seem like the two sides are getting much closer.

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<v Speaker 5>Yeah, well, I think it's not imminent as and within

0:13:52.840 --> 0:13:55.160
<v Speaker 5>the next day or two that we're on an off round.

0:13:55.280 --> 0:13:58.079
<v Speaker 5>But President Trump is clearly going to be faced with

0:13:58.160 --> 0:14:01.960
<v Speaker 5>the decision, which is at some point to declare victory.

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<v Speaker 5>He's already done that a few times even as the

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<v Speaker 5>fighting continues, but to give some reason to pull back,

0:14:09.240 --> 0:14:12.080
<v Speaker 5>to take the exit ramp. As you say, But if

0:14:12.120 --> 0:14:15.520
<v Speaker 5>he does so at this point, he's doing this knowing

0:14:15.600 --> 0:14:20.000
<v Speaker 5>that he is leaving a significant, a not insignificant amount

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<v Speaker 5>of highly enriched uranium that essentially is very close to

0:14:24.440 --> 0:14:28.520
<v Speaker 5>or is perceived by some as giving Iran and whoever

0:14:28.560 --> 0:14:32.560
<v Speaker 5>remains in Iran a nuclear weapon capability. That I should

0:14:32.560 --> 0:14:36.320
<v Speaker 5>note is because President Trump. That highly enriched uranium occurred

0:14:36.320 --> 0:14:39.200
<v Speaker 5>because President Trump in his first term pulled out of

0:14:39.240 --> 0:14:44.040
<v Speaker 5>an agreement with Iran, the United States, Europe others with

0:14:44.160 --> 0:14:48.320
<v Speaker 5>Iran to restrict their enrichment uranium. But so the decision

0:14:48.360 --> 0:14:51.800
<v Speaker 5>he'll have to make is whether he continues going forward

0:14:52.040 --> 0:14:55.160
<v Speaker 5>puts US troops on the ground in a highly risky

0:14:56.240 --> 0:15:00.680
<v Speaker 5>situation to try to capture that highly enriched uran, or

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<v Speaker 5>if he finds a way to declare victory sooner but

0:15:04.360 --> 0:15:07.080
<v Speaker 5>leaving behind a very unstable situation.

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<v Speaker 1>You know, we're trying to sort of gauge what President

0:15:10.920 --> 0:15:13.520
<v Speaker 1>Trump could call a victory in this situation when we

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<v Speaker 1>don't necessarily know what the goal and justify strategy was

0:15:17.360 --> 0:15:20.520
<v Speaker 1>right for this initial conflict. But have we seen any

0:15:20.560 --> 0:15:24.840
<v Speaker 1>examples in past conflicts that perhaps could closely mirror to

0:15:24.880 --> 0:15:26.920
<v Speaker 1>what's happening in the run right now to sort of

0:15:26.960 --> 0:15:28.840
<v Speaker 1>gauge how this could unfold.

0:15:30.880 --> 0:15:36.400
<v Speaker 5>So I'm worry about trying parallels to pass examples, because

0:15:36.480 --> 0:15:40.000
<v Speaker 5>each conflict has its own set of quite literally facts

0:15:40.040 --> 0:15:42.360
<v Speaker 5>on the ground. But I think what we have seen

0:15:42.400 --> 0:15:47.720
<v Speaker 5>with President Trump at any number of instances is a willing,

0:15:48.360 --> 0:15:56.040
<v Speaker 5>willingness and ability to shape facts to what he perceives

0:15:56.560 --> 0:16:00.160
<v Speaker 5>as most useful to him. And so by saying that,

0:16:00.200 --> 0:16:02.280
<v Speaker 5>I would say that, you know, if he decides, and

0:16:02.320 --> 0:16:05.200
<v Speaker 5>we've heard him use words about complete wins and victories.

0:16:05.240 --> 0:16:08.800
<v Speaker 5>In fact, in the last engagement with Iran, he talked

0:16:08.800 --> 0:16:12.840
<v Speaker 5>about the United States having obliterated their nuclear weapon capability,

0:16:12.840 --> 0:16:15.480
<v Speaker 5>which is obviously not the case. But he could frame

0:16:15.560 --> 0:16:18.400
<v Speaker 5>this in a way now if he chose to that

0:16:18.440 --> 0:16:21.840
<v Speaker 5>would give the United States an off ramp. Open question

0:16:21.880 --> 0:16:25.240
<v Speaker 5>on his ability to talk with Israeli leadership, with Prime

0:16:25.240 --> 0:16:28.600
<v Speaker 5>Mister Natanyahu about how and if they would pull back

0:16:28.640 --> 0:16:32.120
<v Speaker 5>as well. So it's at this point is very much

0:16:32.160 --> 0:16:34.640
<v Speaker 5>in the framing in terms of what he does next

0:16:34.640 --> 0:16:38.640
<v Speaker 5>and what kinds of costs he's willing to endure over

0:16:38.720 --> 0:16:40.360
<v Speaker 5>the longer term if he stays in.

0:16:42.760 --> 0:16:46.560
<v Speaker 1>We're now seeing a president who has become boldly interventionist. Right,

0:16:46.600 --> 0:16:49.640
<v Speaker 1>we're talking about Iran, We're talking abou Venezuela. President Trump

0:16:49.720 --> 0:16:53.960
<v Speaker 1>now even talking about Cuba, potentially taking Cuba, talking about

0:16:54.000 --> 0:16:58.680
<v Speaker 1>the need for their president to resign. How do global

0:16:58.760 --> 0:17:01.600
<v Speaker 1>leaders take this in And this is my question to you,

0:17:01.720 --> 0:17:04.400
<v Speaker 1>as Prime Minister, Takaichi is supposed to meet with President

0:17:04.400 --> 0:17:07.480
<v Speaker 1>Trump this week in the very, very high stakes conversation

0:17:07.680 --> 0:17:10.560
<v Speaker 1>where the US is asking them for maritime support to

0:17:10.600 --> 0:17:15.560
<v Speaker 1>a pacifist country.

0:17:15.680 --> 0:17:19.639
<v Speaker 5>So my perception is that global leaders throughout the world

0:17:19.800 --> 0:17:24.720
<v Speaker 5>are wary, and for a good reason. But I would

0:17:25.040 --> 0:17:28.200
<v Speaker 5>expect that all of them are carefully calculating what they

0:17:28.240 --> 0:17:31.000
<v Speaker 5>need the United States for, regardless of who's the leader

0:17:31.040 --> 0:17:33.399
<v Speaker 5>of the United States, what they can do on their own,

0:17:33.800 --> 0:17:36.800
<v Speaker 5>what they can do in alliance with others. And thus far,

0:17:37.760 --> 0:17:42.439
<v Speaker 5>Japan's leadership has been I would say, very savvy in

0:17:42.600 --> 0:17:48.160
<v Speaker 5>how they have interacted with President Trump to have him

0:17:48.200 --> 0:17:50.440
<v Speaker 5>feel like his interests are being served and yet also

0:17:50.520 --> 0:17:54.560
<v Speaker 5>be able to manage their own and I would anticipate

0:17:55.600 --> 0:17:57.280
<v Speaker 5>that kind of interaction continuing.

0:17:57.480 --> 0:18:01.240
<v Speaker 2>That was Maura Rudman, practitioner, Senior Fellow at the University

0:18:01.240 --> 0:18:05.040
<v Speaker 2>of Virginia Miller Center, speaking with Bloomberg TV host Heidi Stroud,

0:18:05.080 --> 0:18:08.119
<v Speaker 2>Watts and Cherry On bringing you their conversation here on

0:18:08.119 --> 0:18:13.600
<v Speaker 2>the Daybreak Asia Podcast. Thanks for listening to today's episode

0:18:13.680 --> 0:18:17.679
<v Speaker 2>of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we

0:18:17.720 --> 0:18:21.600
<v Speaker 2>look at the story shaping markets, finance, and geopolitics in

0:18:21.640 --> 0:18:24.800
<v Speaker 2>the Asia Pacific. You can find us on Apple, Spotify,

0:18:24.960 --> 0:18:28.440
<v Speaker 2>the Bloomberg Podcast YouTube channel, or anywhere else you listen.

0:18:28.840 --> 0:18:31.760
<v Speaker 2>Join us again tomorrow for insight on the market moves

0:18:31.840 --> 0:18:36.320
<v Speaker 2>from Hong Kong to Singapore and Australia. I'm Doug Chrisner,

0:18:36.520 --> 0:18:37.919
<v Speaker 2>and this is Bloomberg