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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: They say's the Bloomberg Daybreak Europe podcast. Good morning, It's Monday,

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Speaker 2: the ninth of March. I'm Stephen carrollin Brussels. Coming up today.

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Speaker 2: The price of oil jumps close to one hundred and

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Speaker 2: twenty dollars a barrel amid a broad markets selloff as

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Speaker 2: G seven ministers are said to discuss releasing their emergency reserves.

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Speaker 2: Ayatalla Ali Kamenei's son is announced as Irund's new supreme leader,

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Speaker 2: as President Trump mulls sending special forces into the country.

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Speaker 3: Plus why the Iran.

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Speaker 2: War is the latest blow for Europe's battered chemicals industry.

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Speaker 2: Let's start with a roundup of our top stories. The

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Speaker 2: price of oil jumped close to one hundred and twenty

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Speaker 2: dollars a barrel this morning, as major Middle East producers

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Speaker 2: slash production over the continuing war in the region. The

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Speaker 2: global benchmark broncrude surged by as much as twenty nine

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Speaker 2: percent to one hundred and nineteen dollars and fifty cents

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Speaker 2: a barrel. That's the biggest intra day move since April

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Speaker 2: twenty twenty. WTI also jumped by around a similar amount.

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Speaker 2: The markets are responding to the US that Kuwait and

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Speaker 2: the United Arab Emirates they're reducing oil production as their

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Speaker 2: storage rapidly fills up, while the Strait of Hormuz shipping

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Speaker 2: route remains effectively closed. Sarah Emerson is the president of

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Speaker 2: research firm Esai Energy.

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Speaker 1: You know, I think there was the expectation that this

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Speaker 1: conflict could be resolved in a couple of weeks, and

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Speaker 1: what we've learned.

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Speaker 3: Is that that's not going to be the case.

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Speaker 1: So now as the question of well, if it's not

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Speaker 1: one or two weeks, is it three weeks, is it

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Speaker 1: four weeks, is it five weeks?

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Speaker 3: You know, how long is this going to last? Where

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Speaker 3: the strain is actually.

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Speaker 1: Closed and producers are now being forced to shut in production.

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Speaker 3: Sarah Emerson speaking there.

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Speaker 2: The oil price has paired some of those gains after

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Speaker 2: the Financial Times report of the G seven finance ministers

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Speaker 2: will discuss a possible joint release of oil from their

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Speaker 2: reserves at a meeting later. Right now, Brent is trading

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Speaker 2: up fifteen percent on the day at one hundred and

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Speaker 2: seven dollars a barrel WTI at one hundred and three

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Speaker 2: dollars sixty six up by fourteen percent. The US President

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Speaker 2: Donald Trump, and while has sought to downplay the surge

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Speaker 2: in prices, he said short term oil prices are a

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Speaker 2: small price to pay for world peace and that they

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Speaker 2: will quote drop rapidly when the destruction of the Iran

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Speaker 2: nuclear threat is over. The oil price surges rippling across

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Speaker 2: markets with the sharp sell off in stocks and bonds.

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Speaker 2: Ages benchmark SCHER index dropped the most since April, with

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Speaker 2: South Korea and Japan leading the declines. European and Wall

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Speaker 2: Street futures are also sharply lower, with US and Japanese

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Speaker 2: government bond yields rising. The dollar has strengthened against most

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Speaker 2: major currencies as investors seek refuge. Although goal prices dropped

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Speaker 2: briefly below five one hundred dollars an ounce, All of

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Speaker 2: these moves have moderated somewhat following that report that the

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Speaker 2: G seven will discuss potentially releasing some of their reserves.

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Speaker 2: Spiking crude prices have fueled inflation concerns around the world,

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Speaker 2: reinforcing expectations at the Federal Reserve will keep interest rates

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Speaker 2: on hold for longer. Iran has named the son of

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Speaker 2: the late Ayatala as its new supreme leader. According to

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Speaker 2: the country's semi official fires News agency, fifty six year

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Speaker 2: old Mujtaba Kamenei won a decisive vote in Iran's Assembly

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Speaker 2: of Experts. The Islamic Revolutionary Guard Corp also pledged full

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Speaker 2: obedience to the new leader. Bloomberg's senior editor Wendy Benjaminson

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Speaker 2: says the decision was not a surprise.

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Speaker 4: This was the man that the US really expected would

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Speaker 4: take over for his father. It's the first generational succession

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Speaker 4: since the nineteen seventy nine revolution, and he seems to

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Speaker 4: be the kind of guy who will continue in his

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Speaker 4: father's footsteps in every way.

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Speaker 2: Bloomberg's Wendy Benjaminson there speaking following the announcement, The US

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Speaker 2: President Donald Trump told Fox News houst Brian Kilmead that

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Speaker 2: he was unhappy with the appointment. Much to bah Kamen's

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Speaker 2: selection signals that Iran's regime is less likely to concede

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Speaker 2: to Trump's demand that they surrender, and that he'll continue

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Speaker 2: his father's hardline pro coach. The United States is considering

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Speaker 2: the deployment of special forces to seize Iran's uranium. It's

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Speaker 2: been almost nine months since the UN Inspectors last verified

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Speaker 2: its location. Officials told Bloomberg there's growing concern the highly

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Speaker 2: enriched stockball may have been moved. Speaking to reporters on

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Speaker 2: Air Force One, President Trump was asked if he'd used

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Speaker 2: ground troops to secure it.

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Speaker 3: I find out about that.

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Speaker 5: We haven't talked about it, but it was a total obliteration.

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Speaker 5: They haven't been able to get to it. And at

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Speaker 5: some point maybe we will. You know, it would be

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Speaker 5: a great thing. But right now we're we're just decimating them.

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Speaker 5: But we haven't gone after it.

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Speaker 3: But you know, something we could do later on.

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Speaker 2: President Trump was speaking as the US State Department ordered

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Speaker 2: American diplomats and government employees in Saudi Arabia to leave

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Speaker 2: the country, citing safety risks. The move marks the agency's

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Speaker 2: first ordered departure since the start of the war on Iran.

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Speaker 2: The British Prime Minister Kirs Darmer and Donald Trump discussed

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Speaker 2: the conflict in Iran after a week of public disagreement

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Speaker 2: between the two leaders. Denning Street says the two spoke

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Speaker 2: by phone about military cooperation and the use of UK

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Speaker 2: air bases in the region. It comes after a week

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Speaker 2: of criticism of the Prime Minister by the US President

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Speaker 2: over Britain's support for his war in the Middle East.

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Speaker 2: The UK's Foreign Secretary of f Cooper, is trying to

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Speaker 2: play down the rift.

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Speaker 6: The US President has a responsibility to do what he

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Speaker 6: thinks is right in the US national interest. The UK

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Speaker 6: Prime Minister has the responsibility to do what he thinks

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Speaker 6: is right in the UK's national interest. That means sometimes

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Speaker 6: we will disagree.

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Speaker 2: Cooper was a junior minister when the UK invaded Iraq

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Speaker 2: in two thousand and three, which is at a lasting

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Speaker 2: impact on public opinion. A recent poll by Yugov showed

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Speaker 2: only eight percent of Britain supported the UK getting directly

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Speaker 2: involved in the Iran war. While the Prime Minister has

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Speaker 2: raised the prospect of intervening to help households with energy

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Speaker 2: bills as oil price as climb with more Here's Binbrigs.

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Speaker 7: James Walcock Kirs Starmer is under pressure from trade unions

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Speaker 7: and his own Labor and Peace to prepare a support

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Speaker 7: package in the event of a prolonged conflict. In a

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Speaker 7: pre released extract from REMARKSI is due to deliver latest today,

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Speaker 7: the Prime Minister is expected to say the public is

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Speaker 7: rightly worrying what this means for life at home, their bills,

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Speaker 7: their jobs, their communities. I want to address these concerns

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Speaker 7: head on. The comments come as the Resolution Foundation think

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Speaker 7: tank warns that last week's spiking gas and oil prices

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Speaker 7: could cost a typical household five hundred pounds. According to

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Speaker 7: the Office for Budget Responsibility, the last time the government

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Speaker 7: intervened during the Ukraine War, the cost of supporting households

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Speaker 7: and businesses to the energy price spike topped seventy eight

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Speaker 7: billion pounds over two years in London, James Wilcock Bloomberg Radio.

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Speaker 2: In Germany, the party of the Chancellor Frederick Martz narrowly

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Speaker 2: last a crucial state election. The incumbon Green Party won

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Speaker 2: just over thirty percent of the vote in Baden Wartenberg,

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Speaker 2: compared with twenty nine point seven percent for Mercy's CDU.

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Speaker 2: The CDU had been projected to win the region before

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Speaker 2: a gaff ridden campaign. Support for the far right AfD

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Speaker 2: party nearly doubled to eighteen point seven percent from five

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Speaker 2: years ago. And those are your top stories. On the markets.

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Speaker 2: The MSCIS Specific Index down currently by three point nine percent,

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Speaker 2: Eurostocks fifty features two point one percent lower, smpmes on

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Speaker 2: Wall Street down by one and a half percent. Oil

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Speaker 2: prices up fifteen percent on the day for Brent crew

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Speaker 2: one hundred and six dollars seventy two on the barrel,

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Speaker 2: but moving fast. The Bloomberg Dollar Spot Index up by

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Speaker 2: three tenths of one percent this morning. Well, in a moment,

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Speaker 2: we're going to bring you the latest on how the

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Speaker 2: war in the Middle East is another blow for Europe's

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Speaker 2: chemicals industry. But let's first bring you up to date

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Speaker 2: on the surge and oil prices as investors are thinking

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Speaker 2: again about what the around war means for energy markets.

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Speaker 2: We've got Stephen Stopchinsky with us, who leads our team

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Speaker 2: covering energy in Asia. Stephen talk us through what's been

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Speaker 2: happening since cruid markets reopened. We've had this massive surge

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Speaker 2: in prices and now somewhat of a moderation after this

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Speaker 2: latest reports about the potential for a release of reserves.

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Speaker 3: Yeah.

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Speaker 8: So, I think the market over the weekend was getting

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Speaker 8: more and more stressed out according to the people that

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Speaker 8: I was talking to. At least, you know, you're going

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Speaker 8: into the weekend, you're not sure what's going to happen.

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Speaker 8: You got forty eight hours, how will the market open?

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Speaker 8: And I think some of the worrying things that happened

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Speaker 8: over the weekend is the retaliatory strikes from Iran continued.

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Speaker 8: It did not look like there was any easing of tension.

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Speaker 8: In fact, it looked like it was getting worse. The

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Speaker 8: US wasn't showing like it's going to back down, especially

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Speaker 8: rhetoric coming out of the White House and from Trump himself.

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Speaker 8: And then on top of that, you had some major

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Speaker 8: producers you had quit, and you also had Adnock looking

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Speaker 8: to adjust or lower their oil production because their inventories

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Speaker 8: are getting high as they can't export the fuel. And

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Speaker 8: so because of all of that, you saw this huge

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Speaker 8: run up in prices in the Asia morning. First we

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Speaker 8: hit the one hire and ten dollars level for Brent

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Speaker 8: the first time in in over three years, and then

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Speaker 8: we click, we're getting we were getting very close to

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Speaker 8: one hundred and twenty dollars. Then the FT reported but

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Speaker 8: a little bit less than an hour ago that the

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Speaker 8: G seven nations were going to meet today to discuss

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Speaker 8: a possible release of strategic reserves in course together basically

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Speaker 8: and have a meeting with the IA, which helps kind

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Speaker 8: of coordinate all of that.

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Speaker 3: That meeting.

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Speaker 8: According to the FT is happening at eight thirty am

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Speaker 8: New York time, which is a very important time to

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Speaker 8: be watching out for. And also it looked like there

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Speaker 8: were already some countries that were basically approving of the plan.

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Speaker 8: They were for a potential release, which would be the

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Speaker 8: United States and two other G seven nations. And then

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Speaker 8: you saw oil prices come back a little bit. You

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Speaker 8: were still above one hundred dollars. There's still a lot

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Speaker 8: of fear and anxiety in the market, and I think

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Speaker 8: when you talk to traders, a strategic release does help

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Speaker 8: to ease things, no doubt, but it's just a bandage

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Speaker 8: because with the straight of horror moone shut, that's cutting

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Speaker 8: off twenty percent of global seaborne oil supply. And as

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Speaker 8: long as that remains shut, there are going to be

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Speaker 8: parts of the market that just aren't getting the oil

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Speaker 8: that they need. And if you do get it, it's

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Speaker 8: going to be too expensive.

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Speaker 3: What's the trajectory from here?

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Speaker 9: Then?

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Speaker 2: The longer the market remains closed, you know, how much

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Speaker 2: further could we see oil prices go?

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Speaker 3: Yeah, I mean we've got warnings.

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Speaker 8: So Qatar's energy minister told the FT late last week

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Speaker 8: that we could see Brent hit one hundred and fifty

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Speaker 8: dollars if this remains shut for weeks, because we're going

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Speaker 8: to have all of these oil producers basically have to

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Speaker 8: reduce or supply or closer supply, like we saw with

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Speaker 8: you know, Kuwait and Adnock. Likewise, you've seen some of

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Speaker 8: the banks and other analysts saying, you know, two hundred

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Speaker 8: dollars brent, which we've never hit before, could be something

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Speaker 8: that that is a possibility. But we're in you know,

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Speaker 8: we're quite quite frankly, we're literally we are in unscharded territory.

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Speaker 8: Never before has the strait of Hormus been shut like

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Speaker 8: this before, and not for more than a week.

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Speaker 3: This is this is wild.

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Speaker 8: This is the sorts of situations that countries make emergency

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Speaker 8: plans for. This is why the strategic reserve exists for

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Speaker 8: this very reason. And so now we are actually living it.

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Speaker 8: And so where do oil prices go? You know, everyone

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Speaker 8: has their guests, but I think it's pretty clear that

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Speaker 8: as long as it's from May shut, oil prices are

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Speaker 8: going to go up.

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Speaker 2: Okay, Steven, thank you very much for joining us, Steven Stoptinski.

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Speaker 2: They're leading our team covering energy in Asia. Stay with

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Speaker 2: us more from Bloomberg Daybreak. Europe coming up after this, Well,

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Speaker 2: that jump and oil and gas prices is piling further

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Speaker 2: pressure on energy intentsive industries in many parts of the world.

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Speaker 2: Europe's chemical sector was already reeling from the last energy shocked.

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Speaker 2: Financing has become strained and many plants are at risk

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Speaker 2: of closure.

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Speaker 3: So what do these latest developments mean.

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Speaker 2: Let's bring in our German industry reporter Marylyn Martin has

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Speaker 2: been reporting on this.

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Speaker 3: Marlond, good to have you with us.

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Speaker 2: What was the state of this chemicals industry before the

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Speaker 2: Iran War started?

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Speaker 10: Yeah, so the chemical industry is a cyclical sector in general,

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Speaker 10: but the downturn that we've seen since twenty twenty two,

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Speaker 10: since the energy price spikes, have been structural. So both

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Speaker 10: industry experts but also coos agree that it's a structural

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Speaker 10: downturn that we're seeing. And that's mainly because energy prices

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Speaker 10: are higher than in the US, than in the Middle East,

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Speaker 10: than in China already before the Iran war. And then

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Speaker 10: we also have oversupply in the market. So that's sitting globally,

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Speaker 10: but it's especially hitting Europe part because the sector is

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Speaker 10: struggling so much with the energy prices already. So in

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Speaker 10: China we had a lot of new capacity added and

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Speaker 10: that's of course putting a strain on European assets as well.

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Speaker 10: And at the same time you have very muted demand

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Speaker 10: on the continent because the general econom make situation is

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Speaker 10: not the best. The car sector is struggling. A quarter

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Speaker 10: of German chemicals production goes into the auto industry, so

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Speaker 10: with that sector struggling, of course you also have less

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Speaker 10: demand for chemical products and that's hitting the sector.

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Speaker 2: So what does another jump and energy prices mean for

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Speaker 2: this sector that's already, as you say, been under strain.

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Speaker 10: Yeah, so it's actually really bad timing because as I said,

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Speaker 10: like the market is down already and you had the

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Speaker 10: biggest weekly gains for gas prices in Europe last week.

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Speaker 10: An analyst I talked to said that there's an estimate

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Speaker 10: of three billion euros in extra costs to the industry

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Speaker 10: annually if these prices stay elevated. And the problem is that,

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Speaker 10: like for the chemical industry, the main like figure that

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Speaker 10: you're watching is the capacity utilization of plants, So how

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Speaker 10: much capacity you're using from the plants that you have,

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Speaker 10: and that's historically been quite high, but in recent years

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Speaker 10: it's been as low as like seventy percent right now,

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Speaker 10: and you need like eighty percent for profitability. So plants

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Speaker 10: are already operating at a very very low rate, and

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Speaker 10: now with gas prices and oil prices being even higher,

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Speaker 10: that's of course not helping the sector, and especially because

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Speaker 10: if you look at it, like energy is not only

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Speaker 10: like needed to produce things, but it's like also a

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Speaker 10: feedstock for the chemical industry, so you can't just switch

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Speaker 10: to like renewab also something else. You need gas and

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Speaker 10: oil as a feed stop for the industry. So there's

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Speaker 10: no easy solution for the sector.

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Speaker 2: Are their efforts being made at a government level to

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Speaker 2: protect this industry? How economically or politically significant is it

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Speaker 2: in Germany?

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Speaker 10: Yeah, it's one of the biggest sectors in the German economy,

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Speaker 10: so politicians have started to realize that the sector is

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Speaker 10: really struggling a lot. There are discussions right now on

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Speaker 10: the EU level with a Critical Chemicals Alliance as it's called,

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Speaker 10: that in the next weeks or months they will decide

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Speaker 10: which which assets are classified as as strategic or important

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Speaker 10: for the resilience of the continent. Because chemicals go into

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Speaker 10: everything also into ammunition, for example, which becomes more critical

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Speaker 10: when we look at European resilience also from a defense perspective.

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Speaker 10: So there are some efforts being made, but the main

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Speaker 10: question is what it would mean if like you classifies

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Speaker 10: them as critical is needed for European resilience because it's

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Speaker 10: just very unprofitable for a lot of assets right now.

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Speaker 10: So like the question is will governments be able to

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Speaker 10: step in and like subsidize the sector, and yeah, how

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Speaker 10: willing are they to do that? And also in the

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Speaker 10: economic situation that we have right now, there are a

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Speaker 10: lot of sectors struggling, so why should chemicals get the

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Speaker 10: support and will there be enough money even left for

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Speaker 10: the sector.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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