1 00:00:03,080 --> 00:00:09,880 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. For much of the 2 00:00:09,960 --> 00:00:12,880 Speaker 1: past week, oil and gas traders have been bracing for 3 00:00:12,960 --> 00:00:16,120 Speaker 1: a worst case scenario, and they're now watching it. 4 00:00:16,079 --> 00:00:19,120 Speaker 2: Unfold around, effectively shutting down the Strait. 5 00:00:18,800 --> 00:00:19,440 Speaker 1: Of hor Mooz. 6 00:00:19,720 --> 00:00:22,360 Speaker 3: It is at a standstill, so no oil is going 7 00:00:22,360 --> 00:00:22,840 Speaker 3: in or out. 8 00:00:23,000 --> 00:00:26,480 Speaker 1: China's government telling the country's largest oil refiners to suspend 9 00:00:26,600 --> 00:00:30,920 Speaker 1: exports of diesel and gasoline. The confrontation between the United 10 00:00:30,920 --> 00:00:34,680 Speaker 1: States Israel in Iran has entered a volatile new phase, 11 00:00:35,240 --> 00:00:38,760 Speaker 1: one that puts oil reserves and critical infrastructure directly in 12 00:00:38,840 --> 00:00:43,000 Speaker 1: the crosshairs. Iran is widening his response now aiming to 13 00:00:43,080 --> 00:00:47,199 Speaker 1: paralyze the economic lifeblood of this region oil and gas production. 14 00:00:47,600 --> 00:00:50,200 Speaker 4: Very interesting announcement from the President saying that the US 15 00:00:50,240 --> 00:00:54,600 Speaker 4: are looking to provide naval escorts and to lower insurance 16 00:00:54,640 --> 00:00:57,200 Speaker 4: costs for any vessels and tankers looking to pass through 17 00:00:57,200 --> 00:00:57,680 Speaker 4: the streets. 18 00:00:58,400 --> 00:01:00,560 Speaker 1: The Strait of Hormose is one of the world's most 19 00:01:00,600 --> 00:01:03,680 Speaker 1: critical choke points. As much as twenty percent of the 20 00:01:03,720 --> 00:01:07,200 Speaker 1: world's oil passes through the strait each day, and it's 21 00:01:07,240 --> 00:01:10,199 Speaker 1: remained effectively closed since the conflict began. 22 00:01:10,840 --> 00:01:13,400 Speaker 5: Nobody can close the streets of homos for too long. 23 00:01:13,800 --> 00:01:16,200 Speaker 5: So you close that, you have a global crisis. 24 00:01:16,600 --> 00:01:19,600 Speaker 1: Verridin Fesher Raki is the founder and chairman of Energy 25 00:01:19,600 --> 00:01:21,399 Speaker 1: consulting Group FGE. 26 00:01:21,840 --> 00:01:24,000 Speaker 5: If you keep it closed in the price of oil, 27 00:01:24,040 --> 00:01:26,640 Speaker 5: we'll go through the roof. The French and the British 28 00:01:27,160 --> 00:01:30,560 Speaker 5: will surely get involved, and I think maybe Chinese get 29 00:01:30,560 --> 00:01:33,600 Speaker 5: involved too. Everybody has to marry three get involved, because 30 00:01:33,600 --> 00:01:38,039 Speaker 5: that is creating a crisis, worst possible recession, global recession. 31 00:01:38,400 --> 00:01:41,720 Speaker 5: And Iran is just too small fish to be able 32 00:01:41,760 --> 00:01:43,400 Speaker 5: to close the strait of hormos. 33 00:01:43,920 --> 00:01:46,640 Speaker 1: But even if the fighting never reaches that worst case 34 00:01:46,640 --> 00:01:50,960 Speaker 1: scenario for oil markets, countries across Asia, the world's biggest 35 00:01:51,000 --> 00:01:54,960 Speaker 1: buyers of Middle Eastern energy, are bracing for potential shockwaves. 36 00:01:55,440 --> 00:01:58,960 Speaker 2: Japan is very exposed, South Korea is exposed. China buys 37 00:01:59,000 --> 00:02:04,440 Speaker 2: a lot of Iran oil, Taiwan, India, Pakistan has most 38 00:02:04,480 --> 00:02:06,640 Speaker 2: of its guests coming from Qatar. 39 00:02:07,440 --> 00:02:11,680 Speaker 1: Daniel tan Kate oversees Bloomberg's political and economic coverage in Asia. 40 00:02:12,600 --> 00:02:15,880 Speaker 2: It's pretty much affecting every economy in Asia. Not just 41 00:02:16,040 --> 00:02:19,839 Speaker 2: yet because it's still early days. But if you do 42 00:02:19,919 --> 00:02:25,720 Speaker 2: have prolonged sustained rise in oil prices that is inherently 43 00:02:25,760 --> 00:02:29,480 Speaker 2: going to affect most economies in Asia because they buy 44 00:02:29,520 --> 00:02:30,120 Speaker 2: a lot of oil. 45 00:02:38,919 --> 00:02:42,239 Speaker 1: This is the big Take Asia from Bloomberg News. I'm Wanha. 46 00:02:42,680 --> 00:02:45,000 Speaker 1: Every week we take you inside some of the world's 47 00:02:45,000 --> 00:02:48,960 Speaker 1: biggest and most powerful economies and we explore the markets, tycoons, 48 00:02:49,000 --> 00:02:52,960 Speaker 1: and businesses that drive this ever shifting region. Today on 49 00:02:53,000 --> 00:02:56,640 Speaker 1: the show, Asia's biggest economies react to war in the 50 00:02:56,680 --> 00:03:00,240 Speaker 1: Middle East, how the Iran war is rippling through glowble 51 00:03:00,280 --> 00:03:03,840 Speaker 1: oil markets, and which Asian economies are most at risk 52 00:03:04,000 --> 00:03:11,000 Speaker 1: to a large scale disruption. Since last year, China has 53 00:03:11,040 --> 00:03:16,120 Speaker 1: been factoring in the uncertainty surrounding Iranian oil, quietly stockpiling 54 00:03:16,200 --> 00:03:20,160 Speaker 1: crude at onshore sites. While China buys up some ninety 55 00:03:20,200 --> 00:03:23,240 Speaker 1: percent of Iran's oil, those barrels account for less than 56 00:03:23,280 --> 00:03:27,960 Speaker 1: fifteen percent of Beijing's overall oil imports. Russia and Saudi 57 00:03:28,000 --> 00:03:32,200 Speaker 1: Arabia remain China's biggest suppliers, and that's unlikely to change 58 00:03:32,240 --> 00:03:35,960 Speaker 1: anytime soon. But there's a big reason why China is concerned. 59 00:03:36,240 --> 00:03:39,160 Speaker 1: About half of its crude imports passed through the Strait of. 60 00:03:39,240 --> 00:03:45,400 Speaker 5: Ormus twenty percent of the global supply crude oil and 61 00:03:45,520 --> 00:03:48,960 Speaker 5: refined products go through the Straits of Hormones, Soaudis have 62 00:03:49,080 --> 00:03:52,680 Speaker 5: a pipeline to the Red Sea of around two million 63 00:03:52,680 --> 00:03:55,880 Speaker 5: partters per day. Abu Dhabi has a pipeline of about 64 00:03:55,880 --> 00:03:58,320 Speaker 5: a million day and a half partus per day outside 65 00:03:58,360 --> 00:04:02,480 Speaker 5: the Gulf, but beyond there are no other pipelines. Beyond 66 00:04:02,520 --> 00:04:04,520 Speaker 5: that is only the Strese of Horbos. 67 00:04:05,160 --> 00:04:07,840 Speaker 1: When the US and Israel attacked Iran late last week, 68 00:04:08,120 --> 00:04:12,800 Speaker 1: China's response was immediate and pointed. My colleague Daniel ten Kate, 69 00:04:12,920 --> 00:04:16,719 Speaker 1: who covers China's economy and political landscape for Bloomberg, says 70 00:04:16,760 --> 00:04:21,119 Speaker 1: it underscored just how dependent China is on Gulf oil. 71 00:04:21,800 --> 00:04:25,640 Speaker 2: Beijing has basically come out and opposed what's going on. 72 00:04:25,800 --> 00:04:29,520 Speaker 2: We had very strong words from Chinese Foreign Minister Wangi. 73 00:04:30,240 --> 00:04:33,719 Speaker 2: He called it unacceptable to openly kill the leader of 74 00:04:33,720 --> 00:04:37,559 Speaker 2: a sovereign country and institute regime change. So that's very frank, 75 00:04:37,760 --> 00:04:42,839 Speaker 2: very strong language from China opposing this. At the same time, 76 00:04:43,160 --> 00:04:47,160 Speaker 2: they really want to calm things down. So after that statement, 77 00:04:47,680 --> 00:04:51,440 Speaker 2: we had another statement from China saying that Iran also 78 00:04:51,560 --> 00:04:54,960 Speaker 2: needed to respect the reasonable interests of its neighboring states. 79 00:04:55,720 --> 00:04:59,880 Speaker 1: Iran's oil influence has diminished due to prolonged sanctions and 80 00:05:00,080 --> 00:05:03,800 Speaker 1: limited foreign investment. Today, the country accounts for just about 81 00:05:03,800 --> 00:05:07,360 Speaker 1: three percent of global oil supply, producing about three point 82 00:05:07,360 --> 00:05:11,720 Speaker 1: three million barrels a day. Doctor Fesheraki, you're originally from 83 00:05:11,760 --> 00:05:14,919 Speaker 1: Iran and you spent many years living and working there. 84 00:05:15,400 --> 00:05:19,680 Speaker 1: Broadly speaking, how important is Iranian oil to the rest 85 00:05:19,720 --> 00:05:20,200 Speaker 1: of the world. 86 00:05:20,400 --> 00:05:23,719 Speaker 5: I any non production is three and a half million 87 00:05:23,720 --> 00:05:27,080 Speaker 5: matters per day, but all the liquids combined are more 88 00:05:27,120 --> 00:05:29,560 Speaker 5: than five million matters per day, so it's quite important. 89 00:05:30,040 --> 00:05:33,960 Speaker 5: But the oil sales only go to China crude oil sales, 90 00:05:34,279 --> 00:05:39,560 Speaker 5: so it is important only for China. But Chinese can 91 00:05:39,640 --> 00:05:42,799 Speaker 5: replace the Iranian oil right away with other the distant cruds, 92 00:05:43,080 --> 00:05:46,360 Speaker 5: except that they can't receive any discount. They have to 93 00:05:46,400 --> 00:05:48,719 Speaker 5: pay the real market price for it. But it is 94 00:05:48,760 --> 00:05:51,200 Speaker 5: not the case that somehow if the Rnian crude is 95 00:05:51,200 --> 00:05:55,600 Speaker 5: not there, they would be damage to the Chinese security 96 00:05:55,680 --> 00:05:58,760 Speaker 5: or fenergy supplies. Oil is available in the market. 97 00:06:00,120 --> 00:06:04,479 Speaker 1: Thursday, China's government ordered its largest refiners to suspend exports 98 00:06:04,480 --> 00:06:07,600 Speaker 1: of diesel and gasoline as the Middle East crisis deepens. 99 00:06:08,000 --> 00:06:10,719 Speaker 2: China. They want to make sure that their domestic interests 100 00:06:10,720 --> 00:06:13,359 Speaker 2: are not hurt first. That's the top priority, and that 101 00:06:13,480 --> 00:06:16,200 Speaker 2: means getting the oil to flow. Now, if the oil 102 00:06:16,279 --> 00:06:20,640 Speaker 2: is flowing and you have this low level kind of 103 00:06:20,680 --> 00:06:23,680 Speaker 2: fighting going on where the US has to devote a 104 00:06:23,720 --> 00:06:26,000 Speaker 2: lot of attention and resources to the Middle East and 105 00:06:26,080 --> 00:06:29,200 Speaker 2: military assets to the Middle East, but there's not huge 106 00:06:29,200 --> 00:06:33,039 Speaker 2: economic disruption, I think that's the scenario that China would 107 00:06:33,120 --> 00:06:34,520 Speaker 2: not mind seeing. 108 00:06:35,160 --> 00:06:37,680 Speaker 1: If the oil and Iran couldn't flow to China, what 109 00:06:37,680 --> 00:06:39,560 Speaker 1: would that mean for China. 110 00:06:40,120 --> 00:06:42,880 Speaker 5: China can just buy from somebody else. China has the 111 00:06:42,960 --> 00:06:46,599 Speaker 5: money and the capability financial ability to pay. Please remember 112 00:06:46,680 --> 00:06:49,480 Speaker 5: in China, it Anian oil is not used by any 113 00:06:49,520 --> 00:06:52,520 Speaker 5: of the major Chinese companies, so sign a pick cut 114 00:06:52,760 --> 00:06:56,200 Speaker 5: China or Asino. They don't touch it any imprude. Only 115 00:06:56,279 --> 00:06:59,920 Speaker 5: the teapots use it. So if the teapots cannot get 116 00:07:00,240 --> 00:07:02,840 Speaker 5: you know, most of these teapots or uneconomic, and the 117 00:07:02,920 --> 00:07:05,480 Speaker 5: Chinese government wants to close them anyway is a matter 118 00:07:05,520 --> 00:07:09,000 Speaker 5: of time, so they don't have it, they may close earlier, 119 00:07:09,080 --> 00:07:12,840 Speaker 5: and it's better for the economy of China because Chinese 120 00:07:13,480 --> 00:07:17,160 Speaker 5: oil companies have so much spare capacity, they don't really 121 00:07:17,200 --> 00:07:20,040 Speaker 5: need them. And the Iranian crew doesn't go into the 122 00:07:20,080 --> 00:07:23,400 Speaker 5: big defineries in China because the big defineries around the 123 00:07:23,440 --> 00:07:25,840 Speaker 5: stock market, and if you're in the stock market, you 124 00:07:25,920 --> 00:07:29,680 Speaker 5: don't want to go. At least the US sanctions. 125 00:07:29,640 --> 00:07:32,840 Speaker 1: We've seen volatility in the energy markets, which was to 126 00:07:32,880 --> 00:07:37,559 Speaker 1: be expected, but it's been measured. What's something that could 127 00:07:37,640 --> 00:07:41,200 Speaker 1: happen that would send oil north of one hundred dollars 128 00:07:41,240 --> 00:07:43,520 Speaker 1: a barrow, which seems to be kind of the line 129 00:07:43,560 --> 00:07:45,160 Speaker 1: that everybody is watching for. 130 00:07:45,960 --> 00:07:49,200 Speaker 5: I think two events can make that happen. 131 00:07:49,920 --> 00:07:52,960 Speaker 3: One is that if there is an attack on the 132 00:07:53,000 --> 00:07:56,640 Speaker 3: oil fields run for example, in Ua, the attack to 133 00:07:56,680 --> 00:07:59,520 Speaker 3: buy which is a commercial hub, so they hit the hotels, 134 00:07:59,560 --> 00:08:04,400 Speaker 3: they hit residential areas, but they haven't hit the oil 135 00:08:04,440 --> 00:08:07,640 Speaker 3: fields of Abudabi, which is so close to them that 136 00:08:07,680 --> 00:08:10,120 Speaker 3: they could destroy a lot of them overnight. 137 00:08:11,440 --> 00:08:16,120 Speaker 5: They have hit a Saudi refinery, but they haven't hit 138 00:08:16,160 --> 00:08:17,000 Speaker 5: the oil fields. 139 00:08:17,640 --> 00:08:21,000 Speaker 3: Still, if you hit the oil fields that you interfere 140 00:08:21,040 --> 00:08:23,360 Speaker 3: with the flow of oil, then the prices can jump 141 00:08:23,440 --> 00:08:24,240 Speaker 3: very fast. 142 00:08:24,480 --> 00:08:27,760 Speaker 5: If you close access to the straits of Hormos for 143 00:08:27,840 --> 00:08:31,160 Speaker 5: more than a month, the prices can jump hundred dollars 144 00:08:31,240 --> 00:08:31,520 Speaker 5: or more. 145 00:08:32,480 --> 00:08:36,319 Speaker 1: Now, the APAC region where we are now is deeply 146 00:08:36,360 --> 00:08:40,439 Speaker 1: dependent on Middle Eastern oil. China, for example, buys eighty 147 00:08:40,720 --> 00:08:45,319 Speaker 1: percent ninety percent of Iranian crude, Japan imports nearly all 148 00:08:45,360 --> 00:08:48,319 Speaker 1: of its oil from the Middle East, and India gets 149 00:08:48,400 --> 00:08:52,240 Speaker 1: roughly half of its oil from the region. Singapore has 150 00:08:52,280 --> 00:08:56,800 Speaker 1: said it may reassess its GDP depending on how long 151 00:08:56,920 --> 00:08:59,840 Speaker 1: this conflict lasts. And I wonder when you look at 152 00:08:59,880 --> 00:09:04,840 Speaker 1: the region broadly, where do you see the biggest vulnerabilities. 153 00:09:05,760 --> 00:09:08,960 Speaker 5: Everything is dependent on the price. If the price of 154 00:09:09,040 --> 00:09:12,760 Speaker 5: oil is nineteen hundred dollars, then GDP they go down. 155 00:09:13,320 --> 00:09:16,160 Speaker 5: But at the price of seventy seven, seventy eight dollars, 156 00:09:16,400 --> 00:09:19,679 Speaker 5: no impact on GDP. Even at eighty dollars. I mean, 157 00:09:19,720 --> 00:09:22,600 Speaker 5: we've had eighty dollars oil a long time and it 158 00:09:22,640 --> 00:09:25,959 Speaker 5: was totally absorbed. Even in India, eighty dollars oil is 159 00:09:26,000 --> 00:09:30,239 Speaker 5: easily absorbable. In China, eighteen ninety dollars is easily absorbable. 160 00:09:30,679 --> 00:09:33,720 Speaker 5: The issue is that if there is a lack of 161 00:09:33,760 --> 00:09:37,680 Speaker 5: supply so that the economy cannot be run and the 162 00:09:37,720 --> 00:09:40,560 Speaker 5: prices go to the roof, Yes, it has an impact, 163 00:09:40,960 --> 00:09:43,400 Speaker 5: but I think people are jumping the gun out of 164 00:09:43,880 --> 00:09:44,880 Speaker 5: abundance of caution. 165 00:09:45,480 --> 00:09:49,640 Speaker 1: Now, India is hugely reliant on Middle Eastern crude. At 166 00:09:49,679 --> 00:09:54,319 Speaker 1: what oil price does this war become a real problem 167 00:09:54,440 --> 00:09:55,080 Speaker 1: for India. 168 00:09:55,640 --> 00:09:59,400 Speaker 5: Well, India has done a study several years ago that 169 00:09:59,559 --> 00:10:02,880 Speaker 5: eighty do barrel oil is okay with them. They can manage. 170 00:10:03,240 --> 00:10:05,480 Speaker 5: If that was three years ago, I think today eighty 171 00:10:05,480 --> 00:10:09,360 Speaker 5: five dollars ninety dollars would be tolerable. So India has 172 00:10:09,400 --> 00:10:12,960 Speaker 5: a good ability to pay. There is a huge amount 173 00:10:13,000 --> 00:10:18,400 Speaker 5: of strategic petroleum reserves in the world in the AACD countries, 174 00:10:19,080 --> 00:10:22,880 Speaker 5: in the United States, China has a huge amount of 175 00:10:23,040 --> 00:10:28,160 Speaker 5: strategic reserves. Japanese have two hundred and seventy days of 176 00:10:28,200 --> 00:10:31,320 Speaker 5: the strategic reserve, so they can go for a whole 177 00:10:31,440 --> 00:10:35,640 Speaker 5: year without any imports. So nobody else in the world 178 00:10:35,679 --> 00:10:40,599 Speaker 5: has that level of cover. And the Saudis and Ua 179 00:10:40,920 --> 00:10:46,199 Speaker 5: have huge reserves of oil inside of Japan that they 180 00:10:46,240 --> 00:10:49,559 Speaker 5: are obligated to sell to Japan first if there is 181 00:10:49,600 --> 00:10:54,400 Speaker 5: a global crisis. The Koreas have far less reserves, but 182 00:10:56,040 --> 00:10:59,760 Speaker 5: they can manage. These reserves have not been opened yet. 183 00:11:00,120 --> 00:11:03,160 Speaker 5: And then the first indication for you to find out 184 00:11:03,440 --> 00:11:06,800 Speaker 5: if this is serious, is that if this TT reserves 185 00:11:06,840 --> 00:11:08,000 Speaker 5: are ordered to be opened. 186 00:11:11,800 --> 00:11:14,560 Speaker 1: So what scenario does Beijing hope to see out of 187 00:11:14,600 --> 00:11:18,280 Speaker 1: this war? And could the US's actions be driving American 188 00:11:18,440 --> 00:11:22,520 Speaker 1: allies in Asia closer to present chijin Ping. That's coming 189 00:11:22,600 --> 00:11:38,320 Speaker 1: up after the break. Later this month, Trump is set 190 00:11:38,320 --> 00:11:40,920 Speaker 1: to sit down with Chinese present chijin Ping at a 191 00:11:40,960 --> 00:11:44,679 Speaker 1: major summit, and their teams are already laying the groundwork. 192 00:11:45,000 --> 00:11:48,800 Speaker 1: US Treasury Secretary Scott Bessant and Chinese Vice Premier Halufhun 193 00:11:49,200 --> 00:11:51,640 Speaker 1: are expected to gather in Paris in a few weeks 194 00:11:51,679 --> 00:11:56,000 Speaker 1: to hash out possible deals. And despite recent US strikes 195 00:11:56,000 --> 00:11:59,920 Speaker 1: in Iran, Bloomberg's Daniel ten Kate says Washington and Beijing 196 00:12:00,320 --> 00:12:03,439 Speaker 1: have plenty of reasons to keep the conversation going. 197 00:12:04,760 --> 00:12:07,640 Speaker 2: If you look at the economics of it. Yes, China 198 00:12:07,720 --> 00:12:11,760 Speaker 2: eyes a lot of Iran's oil. It's definitely more important 199 00:12:11,800 --> 00:12:15,280 Speaker 2: to Iran than China, and China is pretty diversified in 200 00:12:15,360 --> 00:12:19,120 Speaker 2: its energy mix. But if they lose the entire Gulf, 201 00:12:19,600 --> 00:12:22,439 Speaker 2: that's a much bigger problem for China. I think the 202 00:12:22,480 --> 00:12:26,160 Speaker 2: optics depend a lot on what happens in the next month. 203 00:12:26,720 --> 00:12:29,199 Speaker 2: I mean, Trump has taken out two leaders in two 204 00:12:29,320 --> 00:12:33,240 Speaker 2: months of countries that were friendly with China, and so 205 00:12:34,160 --> 00:12:37,160 Speaker 2: oil could be hurt. You could be seeing more disruption 206 00:12:37,320 --> 00:12:41,400 Speaker 2: the global economy. We're seeing Iran still targeting a lot 207 00:12:41,440 --> 00:12:46,240 Speaker 2: of economic infrastructure in the region, targeting US embassies, targeting 208 00:12:46,480 --> 00:12:51,360 Speaker 2: oil and gas infrastructure, blocking ships in the Strait of Hormuz. 209 00:12:52,080 --> 00:12:57,360 Speaker 2: Trump threatening harder hits against the Iranian regime. So where 210 00:12:57,400 --> 00:12:59,360 Speaker 2: are we in a month. I don't know. I mean, 211 00:12:59,480 --> 00:13:02,280 Speaker 2: I think that's kind of a big question for China 212 00:13:02,280 --> 00:13:04,560 Speaker 2: as well. Would they like to separate the two issues 213 00:13:04,559 --> 00:13:06,880 Speaker 2: and make it go forward, Yes, I think they would, 214 00:13:07,160 --> 00:13:10,760 Speaker 2: But optically, do you want to act really chummy with Trump? 215 00:13:10,800 --> 00:13:13,400 Speaker 2: So I think that's the calculation there. How much do 216 00:13:13,440 --> 00:13:15,920 Speaker 2: they try and signal to the rest of the world 217 00:13:16,240 --> 00:13:20,280 Speaker 2: and to their own population and everything else about what 218 00:13:20,360 --> 00:13:22,840 Speaker 2: they think this means for them. 219 00:13:23,000 --> 00:13:26,120 Speaker 1: How does the US's latest actions We've got this in 220 00:13:26,200 --> 00:13:30,040 Speaker 1: Venezuela earlier this year, affect its relationship with its allies 221 00:13:30,080 --> 00:13:33,120 Speaker 1: in the region. Do you think it helps position China 222 00:13:33,200 --> 00:13:34,800 Speaker 1: as the more reliable partner? 223 00:13:35,480 --> 00:13:38,559 Speaker 2: So you could see a lot of traditional US allies 224 00:13:39,080 --> 00:13:41,720 Speaker 2: at the very least, they're nervous about what's going on, 225 00:13:41,800 --> 00:13:44,079 Speaker 2: and they're uneasy about it, and we see that publicly. 226 00:13:44,760 --> 00:13:47,679 Speaker 2: What they can do about it is another question. You know, 227 00:13:47,840 --> 00:13:50,560 Speaker 2: there's not you still need the US market. The US 228 00:13:50,640 --> 00:13:54,320 Speaker 2: is still the predominant military power, so from the White 229 00:13:54,320 --> 00:13:57,440 Speaker 2: House's point of view, it's probably like, well, who cares, 230 00:13:57,480 --> 00:13:59,840 Speaker 2: what are they going to do anyway? But over the 231 00:14:00,080 --> 00:14:05,400 Speaker 2: long term that does erode American soft power. It's making 232 00:14:05,480 --> 00:14:10,000 Speaker 2: countries look around beyond the US to different partners, and 233 00:14:10,120 --> 00:14:13,360 Speaker 2: China is one of them, and it does kind of 234 00:14:13,440 --> 00:14:16,840 Speaker 2: raise questions like, when you do need those partners the 235 00:14:16,880 --> 00:14:19,200 Speaker 2: next time, when you're under the gun in some way, 236 00:14:19,720 --> 00:14:21,160 Speaker 2: are they going to be there for you in the 237 00:14:21,160 --> 00:14:24,160 Speaker 2: way that you want them to be? And that remains 238 00:14:24,200 --> 00:14:25,000 Speaker 2: an open question. 239 00:14:25,760 --> 00:14:30,080 Speaker 1: What about politically? Where else in this region does Iran 240 00:14:30,160 --> 00:14:31,120 Speaker 1: have close ties? 241 00:14:31,480 --> 00:14:36,080 Speaker 2: Iran maintains fairly good ties with the region, and Asia 242 00:14:36,320 --> 00:14:41,800 Speaker 2: generally likes to maintain good ties with Iran. So India, 243 00:14:41,840 --> 00:14:45,080 Speaker 2: for instance, had quite good ties, and they've invested a 244 00:14:45,120 --> 00:14:47,520 Speaker 2: lot in a port called Chabahar, which was meant to 245 00:14:47,560 --> 00:14:51,920 Speaker 2: provide an alternative route for Afghanistan to send goods out 246 00:14:52,000 --> 00:14:54,320 Speaker 2: so it didn't have to go through Pakistan. For instance, 247 00:14:54,760 --> 00:14:58,080 Speaker 2: a lot of countries here would love to buy Iranian 248 00:14:58,120 --> 00:15:00,880 Speaker 2: oil and probably invest in Iran as well well, but 249 00:15:01,480 --> 00:15:04,400 Speaker 2: they also don't want to fall a foul of US sanctions. 250 00:15:04,480 --> 00:15:07,920 Speaker 2: So if you rely on dollar trade and want access 251 00:15:07,920 --> 00:15:11,680 Speaker 2: to dollars, then you have to play ball, and so 252 00:15:12,000 --> 00:15:15,720 Speaker 2: most Asian economies are doing that. They have no inherent 253 00:15:15,840 --> 00:15:19,000 Speaker 2: dislike of Iran. I'm sure they don't like Iran pursuing 254 00:15:19,680 --> 00:15:22,680 Speaker 2: a nuclear weapon, but they also probably would not support 255 00:15:23,120 --> 00:15:26,040 Speaker 2: regime change, and many have expressed concern about what has 256 00:15:26,040 --> 00:15:30,360 Speaker 2: happened and whether it's compliant with international law. Japan is 257 00:15:30,400 --> 00:15:34,640 Speaker 2: an interesting case too, because they've traditionally tried to position 258 00:15:34,760 --> 00:15:37,960 Speaker 2: themselves as a kind of a go between between the 259 00:15:38,160 --> 00:15:43,600 Speaker 2: US and Iran. We've seen the Iranian ambassador, for instance, 260 00:15:43,840 --> 00:15:47,880 Speaker 2: hold a press briefing in Tokyo. They've also done that 261 00:15:47,920 --> 00:15:52,080 Speaker 2: in Indonesia, where Proboo, the leader there, has offered himself 262 00:15:52,120 --> 00:15:54,680 Speaker 2: as a mediator, and of course he's close to Trump 263 00:15:55,200 --> 00:15:58,600 Speaker 2: and joined his Board of Peace and considering sending troops 264 00:15:58,600 --> 00:16:02,600 Speaker 2: to Gaza. So basically everyone in Asia wants to get 265 00:16:02,600 --> 00:16:05,440 Speaker 2: along with both countries. They want to keep the oil 266 00:16:05,480 --> 00:16:07,480 Speaker 2: flowing and they want to end this thing as quickly 267 00:16:07,480 --> 00:16:08,120 Speaker 2: as possible. 268 00:16:09,480 --> 00:16:11,960 Speaker 1: And I think what's also interesting is that the Middle 269 00:16:11,960 --> 00:16:15,360 Speaker 1: Eastern hubs are actually quite important to Asia in a 270 00:16:15,400 --> 00:16:18,680 Speaker 1: way that you wouldn't necessarily think at first. But Middle 271 00:16:18,680 --> 00:16:21,200 Speaker 1: Eastern hubs, you know, do link Asia to Europe, to 272 00:16:21,280 --> 00:16:24,320 Speaker 1: Africa and the US. I mean, certainly when you look 273 00:16:24,320 --> 00:16:28,200 Speaker 1: at flights, thousands of flights were canceled after UAE airports 274 00:16:28,240 --> 00:16:33,720 Speaker 1: closed for security reasons. How damaging is this to Asia's 275 00:16:33,840 --> 00:16:35,640 Speaker 1: connectivity and to commerce. 276 00:16:36,760 --> 00:16:39,960 Speaker 2: Certainly if it's prolonged, it's going to change the equation 277 00:16:40,120 --> 00:16:43,080 Speaker 2: for how people get around here. I'm sure everyone knows 278 00:16:43,120 --> 00:16:46,240 Speaker 2: people who are stuck in hotels in Dubai right now. 279 00:16:46,280 --> 00:16:50,480 Speaker 2: And that's one example of how connected and how important 280 00:16:50,520 --> 00:16:52,520 Speaker 2: the Middle East is as a hub, as a transit 281 00:16:52,600 --> 00:16:56,360 Speaker 2: hub in particular. There's all sorts of questions on logistics 282 00:16:56,400 --> 00:16:58,800 Speaker 2: right now that are just being worked out. I think 283 00:16:58,800 --> 00:17:01,200 Speaker 2: we're in the emerging and see stage right now, where 284 00:17:01,240 --> 00:17:03,920 Speaker 2: people can sort of deal with it for a week 285 00:17:04,040 --> 00:17:06,439 Speaker 2: or two and get on with life if it ends quickly. 286 00:17:06,920 --> 00:17:10,680 Speaker 2: But if you're looking at prolonged disruptions to flights, to shipping, 287 00:17:11,119 --> 00:17:15,120 Speaker 2: to oil supply, then your supply chains are gonna need 288 00:17:15,160 --> 00:17:19,280 Speaker 2: to be reworked, and anytime you do that, it's more expensive, 289 00:17:19,800 --> 00:17:21,800 Speaker 2: so that means people are going to be paying more 290 00:17:22,240 --> 00:17:24,520 Speaker 2: for a lot of various goods and travel. 291 00:17:29,480 --> 00:17:33,200 Speaker 1: This is The Big Take Asia from Bloomberg News. I'm wanha. 292 00:17:33,359 --> 00:17:36,000 Speaker 1: To get more from The Big Take and unlimited access 293 00:17:36,040 --> 00:17:38,920 Speaker 1: to all of Bloomberg dot Com, subscribe today at Bloomberg 294 00:17:38,960 --> 00:17:42,400 Speaker 1: dot com slash podcast Offer. If you like the episode, 295 00:17:42,520 --> 00:17:44,960 Speaker 1: make sure to subscribe and review The Big Take Asia 296 00:17:45,080 --> 00:17:48,080 Speaker 1: wherever you listen to podcasts. It helps people find the show. 297 00:17:48,440 --> 00:17:49,920 Speaker 1: Thanks for listening. To see you next time.