Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Chrisner. The
Speaker 2: crude oil market remains volatile given a lot of the
Speaker 2: uncertainty around shipments leaving the Strait of horn Mooves. This
Speaker 2: narrow waterway has been effectively closed by Iran. Prices were
Speaker 2: in retreat in the New York session on the bet
Speaker 2: that oil tankers will soon be able to traverse the strait,
Speaker 2: and some of that optimism seem to come from ship
Speaker 2: tracking data showing a Pakistan flag tanker clearing the Strait
Speaker 2: of horn Moos. For a closer look, I'm joined by
Speaker 2: Bloomberg's Paul Dobson. Paul is Executive editor for Asia Markets.
Speaker 2: Thank you for being here from our studios in Singapore.
Speaker 2: I just wanted to add that point. I know there
Speaker 2: are a lot of threads to bring together here, Paul,
Speaker 2: but if you look at the move higher right now
Speaker 2: in oil prices, which is to say negative sentiment, is
Speaker 2: there a way that you can help me understand what's
Speaker 2: driving this price action?
Speaker 3: Yeah, Hi, Doug. I think that the market will point
Speaker 3: to a few different reasons for the lower prices. I
Speaker 3: think number one is that release from the strategic reserves
Speaker 3: by the ITEA, and the way that that's structured. Think
Speaker 3: in the US in particular, it's in exchange, so it's
Speaker 3: sort of borrowing from the future in a way, and
Speaker 3: so in order to price that you have lower short
Speaker 3: term prices and higher longer term prices once that sort
Speaker 3: of gets put back into storage later on. On top
Speaker 3: of that, we do have some tankers making their way
Speaker 3: out of the Strait of Hormus and heading to various locations.
Speaker 3: The Iranian crude is continued to flow. I think that
Speaker 3: Trump has said that they've been allowing that and some
Speaker 3: other tankers, for example, going to Pakistan. You have the
Speaker 3: availability of the Russian crewed coming back onto the market
Speaker 3: after Trump allowed a waiver on the sanctions there. So
Speaker 3: that's also helping some countries that are particularly strapped to
Speaker 3: get their hands on some fuel. And you have the
Speaker 3: sort of alternative supply routes. So we know that there's
Speaker 3: a large cluster of tankers waiting to pick up crude
Speaker 3: on the Saudi coast in the Red Sea rather than
Speaker 3: in the Strait of Horror Moos. So I think it
Speaker 3: all points to the idea that all those supplier is
Speaker 3: going to be reduced, It's not going to be completely
Speaker 3: kind of halted from the oil producers in the Strait
Speaker 3: of Hormuz area. That said, I think I would be
Speaker 3: cautious about getting too it carried away or too excited
Speaker 3: about this. You know, we do have prices still around
Speaker 3: one hundred dollars a barrel, and we do still have
Speaker 3: those supply curbs and impingements everywhere. And the fact of
Speaker 3: the matter is that the longer this goes on, the
Speaker 3: more stockpiles around the world are going to get drained,
Speaker 3: the scarce of oil is going to become, the higher
Speaker 3: the price is going to go.
Speaker 2: No doubt about that. And we talk a lot about
Speaker 2: the volatility being linked to headline risk, and I'm getting
Speaker 2: a report on the Bloomberg terminal. Now, this is a
Speaker 2: news report coming out of the UAE that the government
Speaker 2: has closed its airspace to some extent early in the
Speaker 2: morning on Tuesday. So when you get a headline like
Speaker 2: that and I'm looking at the knee jerk response and
Speaker 2: the oil market is to push prices higher, it just
Speaker 2: kind of addresses the level of anxiety in the market
Speaker 2: right now.
Speaker 3: It does, and we saw in Dubai yesterday, we had
Speaker 3: the blaze near the airport that disrupted flights for a
Speaker 3: while already. And the fact that the Iranian seem to
Speaker 3: be targeting more energy infrastructure is also a traveling development
Speaker 3: that is causing more headaches and again sort of ratcheting
Speaker 3: up the stresses in the oil and the energy markets.
Speaker 3: Now you do have Trump as well talking about this
Speaker 3: idea of can he put together a coalition that will
Speaker 3: help to provide military sort of escorts, navy escorts to
Speaker 3: get more tankers out of the Strait of hor Mews.
Speaker 3: And it doesn't seem to be getting a very enthusiastic
Speaker 3: reception in global markets or in global geopolitical space so far.
Speaker 3: I think you have Japan not looking very enthusiastic, South
Speaker 3: Korea saying it's thinking about it. You do have France
Speaker 3: saying that indicating that they may be willing to help
Speaker 3: out they think the UK was offering much support either.
Speaker 3: I mean, you can see it both ways, and as
Speaker 3: well on that respect, because these are countries and are
Speaker 3: more dependent on getting that crewed into the global markets
Speaker 3: probably than the US is because the US s energy independence.
Speaker 3: But on the other hand, people are saying well, you
Speaker 3: started this, well, you know, you sorted out. So maybe
Speaker 3: if this goes on longer term, it will be possible
Speaker 3: that you will get to see some of those sort
Speaker 3: of common voice going on. But it's extremely dangerous and precarious,
Speaker 3: and it wouldn't take too many accidents, let's say, for
Speaker 3: that to be halted again. So the idea that that's
Speaker 3: going to really help supply the market anytime scene seems
Speaker 3: to be a little bit optimistic.
Speaker 2: And at the same time, Paul, we have this apparent
Speaker 2: disagreement between the US and the UK as to whether
Speaker 2: or not Iran has been mining the Strait of Hormuz.
Speaker 2: The UK Defense Secretary John Healey was saying earlier it's
Speaker 2: becoming clear that Iran was laying explosives, but from the
Speaker 2: US side, Defense Secretary Pete Hegseth was saying, there's not
Speaker 2: clear evidence that that's the case. This is still a
Speaker 2: very very dangerous setting, is it not?
Speaker 3: Absolutely? I think the tanker track of data seems to
Speaker 3: indicate that the ships that have been leaving the Strait
Speaker 3: of Hormus recently have hugged very closely to the Iranian coastline.
Speaker 3: So some people looking at those movements are suggesting that
Speaker 3: might be bigause of mine activity across the more usual
Speaker 3: shipping routes, but again it could be sort of a
Speaker 3: ruse in order to make it look that way as well.
Speaker 3: So I don't think we have any particularly from clarity
Speaker 3: on that. It is a very narrow channel and if
Speaker 3: there are minds in there, then they would need to
Speaker 3: be cleared before you can get large numbers of ships
Speaker 3: flowing again backwards and forwards, and so that would make
Speaker 3: the situation all the more dangerous. So yeah, I mean,
Speaker 3: we have a lot of stresses and tensions and precarious
Speaker 3: arrangements going on right now, Doug. And you know, the
Speaker 3: KRUDE all market, as you said, is back up again
Speaker 3: a little bit already this morning in asious hours, and
Speaker 3: so that tension looks like it's going to continue and
Speaker 3: to percolate across the rest of global markets as well
Speaker 3: as a result.
Speaker 2: And what's unmistakable is that we've got a pretty powerful
Speaker 2: rally going on in South Korea right now. And I'm
Speaker 2: just going to guess that this is tied to some
Speaker 2: of the commentary that we heard from Jensen Huang, the
Speaker 2: CEO of Nvidia, saying tonight in the US that he
Speaker 2: was expecting to see the company generate at least a
Speaker 2: trillion dollars in chip sales through the end of twenty
Speaker 2: twenty seven. So this just kind of reaffirms the optimism
Speaker 2: maybe some people have as it relates to artificial intelligence.
Speaker 3: Yes, that's right, and that had taken a bit of
Speaker 3: a back seat as we'd focus so much on the
Speaker 3: situation in the Middle East. So it's good to hear
Speaker 3: something a bit more positive about the chip in the
Speaker 3: AI industry. I think was it that the mag seven
Speaker 3: had entered a correction at the start of this week,
Speaker 3: and so we have seen a little bit of a
Speaker 3: rebound in those companies now, and yeah, that's definitely feeding
Speaker 3: into the Asia market environment. I think there were a
Speaker 3: couple of deals in the last twenty four hours as well,
Speaker 3: the in AI space, and so yes, that had become
Speaker 3: a little bit of an underappreciated theme that South Korea
Speaker 3: had obviously had a lot of what as the war
Speaker 3: broke out, and very steep losses in a couple of
Speaker 3: days of trading at least, and so maybe they have
Speaker 3: those sort of value seekers coming back out and eyeing
Speaker 3: the big chip stock. Samsung sk Heinix. I'm thinking that
Speaker 3: there might be an opportunity here to pick them up
Speaker 3: at a little bit of a discount.
Speaker 2: So before I let you go, I want to get
Speaker 2: your thoughts on what we heard today from President Trump.
Speaker 2: He has requested a delay of his trip to China.
Speaker 2: He had been scheduled, obviously to meet with Shi Jinping
Speaker 2: at the end of the month, but mister Trump asked
Speaker 2: to put it off for a month or so because
Speaker 2: of the war in Iran. Give me your sense of
Speaker 2: what people are saying about how this war is impacting
Speaker 2: relations between the US and China so far.
Speaker 3: I would probably say that they're trying to look the
Speaker 3: other way on both sides when it comes to the
Speaker 3: US China sort of relationship. I mean, Chrump evenflated the
Speaker 3: idea that maybe China would like to send some ships
Speaker 3: as well to help with the extraction of tankers from
Speaker 3: the straight up holl News. I'm not sure that China
Speaker 3: wants to go there, but the backdrop had so far
Speaker 3: been very positive in terms of the relationship between Trump
Speaker 3: and She. Between the US and China, that sort of
Speaker 3: truce that had been struck after we saw the big
Speaker 3: escalation of the tariffs, you know, in April, May June
Speaker 3: last year, and I think that you know, there were
Speaker 3: even meetings between some of the officials over the past
Speaker 3: week that on the whole seems to come out relatively favorably.
Speaker 3: So the idea that this meeting has been delayed is
Speaker 3: probably you know, Trump has occupied with other things, bigger
Speaker 3: things that he needs to worry about right now, and
Speaker 3: so perhaps from both sides perspective, it actually makes sense
Speaker 3: to wait a second see how that situation evolves before
Speaker 3: talking about what happens next. In the terms of the
Speaker 3: US China relationship, what we did see yesterday was su
Speaker 3: been prices falling. The idea being the you know, if
Speaker 3: Trump and she don't meet, then maybe there won't be
Speaker 3: some more purchases of US agricultural products from China agreed
Speaker 3: to and so you know, the market does have a
Speaker 3: little bit of a reaction to that, but it seems
Speaker 3: like it's more of a delay rather than a sort
Speaker 3: of disagreement at this point.
Speaker 2: Inside, Okay, Paul, thank you so very much. We'll leave
Speaker 2: it there. Bloomberg's Paul Dobson. Paul is executive editor for
Speaker 2: Asia Markets. Joining us here on the Daybreak Asia Podcast.
Speaker 2: Welcome back to the Daybreak Asia Podcast. I'm Doug Prisner.
Speaker 2: President Trump has requested a delay of his trip to Beijing.
Speaker 2: He had been scheduled to meet with President Chi chen
Speaker 2: Ping at the end of the month, but he's asking
Speaker 2: to put it off for a month or so because
Speaker 2: of the war in Iran. And at the same time,
Speaker 2: President Trump reiterated an appeal for help from other nations,
Speaker 2: including China, to help secure this straight of horror moves. Now,
Speaker 2: several nations have already said they're not getting involved. In
Speaker 2: That list includes Spain, Italy, Japan, and Australia. And that's
Speaker 2: where we begin our conversation with Mara Rudman. Mara is
Speaker 2: a practitioner Senior Fellow at the University of Virginia Miller Center.
Speaker 2: She spoke with Bloomberg TV host Heidi Stroud, Watts and Sherry.
Speaker 4: On the narratives myriad of fuss moving at this point.
Speaker 4: But it was quite interesting that we did see at
Speaker 4: one point President Trump trying to draw in a number
Speaker 4: of countries and allies to help him, not with the
Speaker 4: war effort necessarily, but certainly the effort to try and
Speaker 4: restore energy security and one of those sort of reach
Speaker 4: outs was directly to China. Is there anything that Beijing
Speaker 4: has to gain to become further involved in what's going
Speaker 4: on in the Middle East?
Speaker 5: Probably not, And I believe that that is a calculation
Speaker 5: that China is making. They while all global energy markets
Speaker 5: are obviously affected by what is happening actions against Iran
Speaker 5: and with the closure of the almost the closure of
Speaker 5: the state of Hormus, China and Russia are two countries
Speaker 5: that are, if not benefiting, certainly hurting much less than
Speaker 5: all of the countries in the region, than Europe, then
Speaker 5: pretty much everywhere else in the world. Part of that
Speaker 5: with China is because it seems that they are still
Speaker 5: getting some oil from Iran, that the ships that are
Speaker 5: making it through the Strait of Hormus are Iranian ships
Speaker 5: sending oil to China, so they don't feel the same
Speaker 5: pressure that other countries might. And even if they did,
Speaker 5: it's not clear that they would think it was wise
Speaker 5: to respond to President Trump's request, and I put request
Speaker 5: in quotes in an affirmative manner.
Speaker 2: Mara.
Speaker 4: Even as we speak, we're getting more updates when it
Speaker 4: comes to the situation in the Middle East. We've seen
Speaker 4: an announcement from the UAE saying the airspace closure has
Speaker 4: is a temporary closure of its airspace. According to the
Speaker 4: news agency there, the official news agency, we're also hearing
Speaker 4: that it's a quote exceptional precautionary measure that's been taken
Speaker 4: to close that UAE airspace. We know that even in
Speaker 4: the last few hours we had the drone strike that
Speaker 4: affected the ue gas fields and the suspension of operations there.
Speaker 4: So things continue to play out, even as it's a
Speaker 4: bit of alleviation when it comes to how markets are
Speaker 4: feeling about oil prices. But I do wonder are we
Speaker 4: learning much more about where we're at in these operations,
Speaker 4: how close we are to any sort of conclusion. Is
Speaker 4: there any possibility for an off ramp, because it doesn't
Speaker 4: seem like the two sides are getting much closer.
Speaker 5: Yeah, well, I think it's not imminent as and within
Speaker 5: the next day or two that we're on an off round.
Speaker 5: But President Trump is clearly going to be faced with
Speaker 5: the decision, which is at some point to declare victory.
Speaker 5: He's already done that a few times even as the
Speaker 5: fighting continues, but to give some reason to pull back,
Speaker 5: to take the exit ramp. As you say, But if
Speaker 5: he does so at this point, he's doing this knowing
Speaker 5: that he is leaving a significant, a not insignificant amount
Speaker 5: of highly enriched uranium that essentially is very close to
Speaker 5: or is perceived by some as giving Iran and whoever
Speaker 5: remains in Iran a nuclear weapon capability. That I should
Speaker 5: note is because President Trump. That highly enriched uranium occurred
Speaker 5: because President Trump in his first term pulled out of
Speaker 5: an agreement with Iran, the United States, Europe others with
Speaker 5: Iran to restrict their enrichment uranium. But so the decision
Speaker 5: he'll have to make is whether he continues going forward
Speaker 5: puts US troops on the ground in a highly risky
Speaker 5: situation to try to capture that highly enriched uran, or
Speaker 5: if he finds a way to declare victory sooner but
Speaker 5: leaving behind a very unstable situation.
Speaker 1: You know, we're trying to sort of gauge what President
Speaker 1: Trump could call a victory in this situation when we
Speaker 1: don't necessarily know what the goal and justify strategy was
Speaker 1: right for this initial conflict. But have we seen any
Speaker 1: examples in past conflicts that perhaps could closely mirror to
Speaker 1: what's happening in the run right now to sort of
Speaker 1: gauge how this could unfold.
Speaker 5: So I'm worry about trying parallels to pass examples, because
Speaker 5: each conflict has its own set of quite literally facts
Speaker 5: on the ground. But I think what we have seen
Speaker 5: with President Trump at any number of instances is a willing,
Speaker 5: willingness and ability to shape facts to what he perceives
Speaker 5: as most useful to him. And so by saying that,
Speaker 5: I would say that, you know, if he decides, and
Speaker 5: we've heard him use words about complete wins and victories.
Speaker 5: In fact, in the last engagement with Iran, he talked
Speaker 5: about the United States having obliterated their nuclear weapon capability,
Speaker 5: which is obviously not the case. But he could frame
Speaker 5: this in a way now if he chose to that
Speaker 5: would give the United States an off ramp. Open question
Speaker 5: on his ability to talk with Israeli leadership, with Prime
Speaker 5: Mister Natanyahu about how and if they would pull back
Speaker 5: as well. So it's at this point is very much
Speaker 5: in the framing in terms of what he does next
Speaker 5: and what kinds of costs he's willing to endure over
Speaker 5: the longer term if he stays in.
Speaker 1: We're now seeing a president who has become boldly interventionist. Right,
Speaker 1: we're talking about Iran, We're talking abou Venezuela. President Trump
Speaker 1: now even talking about Cuba, potentially taking Cuba, talking about
Speaker 1: the need for their president to resign. How do global
Speaker 1: leaders take this in And this is my question to you,
Speaker 1: as Prime Minister, Takaichi is supposed to meet with President
Speaker 1: Trump this week in the very, very high stakes conversation
Speaker 1: where the US is asking them for maritime support to
Speaker 1: a pacifist country.
Speaker 5: So my perception is that global leaders throughout the world
Speaker 5: are wary, and for a good reason. But I would
Speaker 5: expect that all of them are carefully calculating what they
Speaker 5: need the United States for, regardless of who's the leader
Speaker 5: of the United States, what they can do on their own,
Speaker 5: what they can do in alliance with others. And thus far,
Speaker 5: Japan's leadership has been I would say, very savvy in
Speaker 5: how they have interacted with President Trump to have him
Speaker 5: feel like his interests are being served and yet also
Speaker 5: be able to manage their own and I would anticipate
Speaker 5: that kind of interaction continuing.
Speaker 2: That was Maura Rudman, practitioner, Senior Fellow at the University
Speaker 2: of Virginia Miller Center, speaking with Bloomberg TV host Heidi Stroud,
Speaker 2: Watts and Cherry On bringing you their conversation here on
Speaker 2: the Daybreak Asia Podcast. Thanks for listening to today's episode
Speaker 2: of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we
Speaker 2: look at the story shaping markets, finance, and geopolitics in
Speaker 2: the Asia Pacific. You can find us on Apple, Spotify,
Speaker 2: the Bloomberg Podcast YouTube channel, or anywhere else you listen.
Speaker 2: Join us again tomorrow for insight on the market moves
Speaker 2: from Hong Kong to Singapore and Australia. I'm Doug Chrisner,
Speaker 2: and this is Bloomberg