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

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Speaker 2: This is the Bloomberg Day Baker podcast. Good morning, It's Monday,

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Speaker 2: the second of March. I'm Caroline Hepget in London and.

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Speaker 3: I'm Stephen Carolin Brussels. Coming up today. US President Donald

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Speaker 3: Trump says there'll be no let up in strikes against

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Speaker 3: Iran as he calls on the country's leaders to capitulate.

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Speaker 2: Oil prices surge as traders assess the effective closure of

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Speaker 2: a key transit point in the Strait of Hall moves.

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Speaker 3: Plus travel chaos spreads across the Middle East. Airlines halt

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Speaker 3: flight as ongoing strikes leave Dubai facing a nightmare scenario.

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Speaker 4: Let's start with a roundup of our top stories.

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Speaker 3: US President Donald Trump says the American bombing campaign against

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Speaker 3: Iran will continue until its objectives are achieved. In a

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Speaker 3: video posted on social media, Trump said the US and

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Speaker 3: Israel had struck hundreds of targets in Iran, including Revolutionary

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Speaker 3: Guard forcilities and air defenses. He also reconfirmed the death

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Speaker 3: of Iran's Supreme leader Ayatala Ali Kamanai and called on

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Speaker 3: the country's leaders to capitulate, as he outlined the reasons

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Speaker 3: for the massive military intervention.

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Speaker 5: We're undertaking, this massive operation not merely to ensure security

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Speaker 5: for our own time and place, but for our children

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Speaker 5: and their children, just as our ancestors have done for

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Speaker 5: us many, many years ago. This is the duty and

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Speaker 5: the burden of a free people. These actions are right,

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Speaker 5: and they are necessary to ensure that Americans will never

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Speaker 5: have to face a radical, bloodthirsty terrorist regime armed with

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Speaker 5: nuclear weapons and lots of threats.

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Speaker 3: Trump's comments came as Iran sent waves of missiles at

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Speaker 3: targets in multiple countries that host US military bases. Projectiles

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Speaker 3: struck buildings and killed civilians in Israel, while defenses in

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Speaker 3: Saudi Arabia cut our barn and Kuwait intercepted incoming fire. Trump,

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Speaker 3: who won the presidency by promising not to endanger American

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Speaker 3: troops in the Middle East, also addressed the death of

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Speaker 3: three US service members during operations.

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Speaker 5: As one nation, we agree for the true American patriots

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Speaker 5: who have made the ultimate sacrifice for our nation, even

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Speaker 5: as we continue the righteous mission for which they gave

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Speaker 5: their lives. We pray for the full recovery of the wounded,

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Speaker 5: and send our immense love and eternal gratitude to the

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Speaker 5: families of the fallen, and sadly, there will likely be

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Speaker 5: more before it ends. That's the way it is.

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Speaker 3: In a brief interview with The New York Times on Sunday,

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Speaker 3: Trump said the assault on Iran could last four or

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Speaker 3: five weeks. Meanwhile, officials in Tehran yesterday said the death

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Speaker 3: tone in the country was already over two hundred, with

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Speaker 3: that figure expected to rise significantly.

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Speaker 2: As the US and Israeli bombing of Iran continues. President

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Speaker 2: Trump has told ABC that his preferred candidates to lead

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Speaker 2: the state were killed in the initial attack. The death

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Speaker 2: of Ayatollah Ali Komene, iran supreme leader, has so owned

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Speaker 2: the country's future leadership into question. Hamone did not publicly

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Speaker 2: designate a successor until one is appointed. A council, compromising

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Speaker 2: the president and two other senior figures, is carrying out

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Speaker 2: the leader's duties. Wendy Sherman, former US Deputy Secutive State,

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Speaker 2: says the Iranian regime will be extremely hard to dislodge.

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Speaker 1: Iran has many layers, It has succession plans, it will

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Speaker 1: have a new leader.

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Speaker 6: It will not splinter easily.

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Speaker 1: Iran's regime is quite institutionalized. The Islamic Revolutionary Guard Corps

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Speaker 1: is quite fierce, and yes, there will be tremendous harm.

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Speaker 1: But let's remember the Iran Iraq war went on for

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Speaker 1: eight years, so Iran does not give up easily. It

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Speaker 1: in fact has an entire hodture of resistance.

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Speaker 2: Wendy Sherman's words came as it was reported that President

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Speaker 2: Trump has agreed to talk to Iran's new leadership. The

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Speaker 2: Atlantic quotes of conversation with the US President in which

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Speaker 2: he said they want to talk, and I have agreed

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Speaker 2: to talk, so I will be talking to them, without

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Speaker 2: specifying who he was referring to. Iran's national security chief,

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Speaker 2: Ali Larijani responded on x to reports that he had

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Speaker 2: reached out to Washington via Oman, saying that the country

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Speaker 2: will not negotiate with the United States.

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Speaker 3: European countries were not involved with the US strikes and

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Speaker 3: have scrambled to react. The UK has since allowed the

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Speaker 3: US to make use of British military bases for the

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Speaker 3: specific purpose of destroying Iranian missile sites, but Prime Minister

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Speaker 3: Kiris Charmer says the UK will not be involved in

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Speaker 3: offensive action.

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Speaker 7: I want to be very clear. We all remember the

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Speaker 7: mistakes of Iraq and we have learned those lessons. We

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Speaker 7: were not involved in the initial strikes on Iran and

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Speaker 7: we will not join offensive action now. But Iran is

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Speaker 7: pursuing a scorched earth strategy, so we are supporting the

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Speaker 7: collective self defense of our allies and our people in

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Speaker 7: the region.

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Speaker 3: The UK Prime Minister Ada that he had taken international

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Speaker 3: legal advice before backing the move and would publish it. Meanwhile,

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Speaker 3: the European Union called for maximum restraint and warrant escalation

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Speaker 3: could lead to unpredictable consequences.

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Speaker 2: Oil prices have surged as traders assess the effect of

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Speaker 2: the conflict on supplies and transit links through the Strait

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Speaker 2: of Hormuz off Iran's coast. Global benchmark Brent crude is

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Speaker 2: about seven percent higher above seventy seven dollars, about after

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Speaker 2: earlier rallying by as much as thirteen percent to the

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Speaker 2: higher since January twenty twenty five. Mckish Sadev is Chief

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Speaker 2: Oil Analysts and CEO at ex Analysts. He says response

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Speaker 2: isn't a surprise.

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Speaker 8: I guess the market has reacted in the right and

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Speaker 8: the measure way and this was expected. US will take

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Speaker 8: action when Hormos is Iran proof. Iran is not blocking

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Speaker 8: the Hormus because they can, because they can't. That's my view,

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Speaker 8: and that's why the oil prices are now now is seventy.

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Speaker 2: Six Mukesh Sadev from ex analysts, speaking to Bloomberg earlier

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Speaker 2: this morning, Tanker traffic through the strait, which handles a

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Speaker 2: fifth of the world's oil, has largely stopped. Iranian authority

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Speaker 2: said yesterday that they had attacked three oil vessels, while

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Speaker 2: President Donald Trump said that US forces sank nine Iranian

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Speaker 2: naval ships. At their monthly meeting, OPEC plus agreed to

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Speaker 2: increase oil production by two hundred and six thousand bows

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Speaker 2: per day, only slightly higher than the pace agreed at

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Speaker 2: previous meetings.

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Speaker 3: Ahead of markets opening today, Goldman sax Is predicting that

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Speaker 3: European natural gas prices could more than double. That's as

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Speaker 3: markets consider the impact of potential disruption in the Strait

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Speaker 3: of Hormones. Bloomberg t out of Bio has more.

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Speaker 9: About a fifth of the world's liquefied natural gas, mainly

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Speaker 9: from Qatar, goes through the Strait of Hormuz, and according

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Speaker 9: to gold and Sachs, just a month long holt to

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Speaker 9: transit through the waterway could see European prices and spot

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Speaker 9: Asian liquefied natural gas surge one hundred and thirty percent. However,

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Speaker 9: the impact on US natural gas would likely be limited,

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Speaker 9: according to the Bank, given the country's position as a

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Speaker 9: large net exporter of the super chilled fuel. According to

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Speaker 9: Bloomberg Intelligence, disruption to Katari liquefied natural gas cargoes via

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Speaker 9: hor Moose halt or direct impacts of production and export

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Speaker 9: infrastructure in the country could erode about twenty percent of

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Speaker 9: the global supply in London. To Bloomberg, Radio Travel Chales

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Speaker 9: has extended through the Middle East and beyond, causing major

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Speaker 9: disruptions at some of the world's busiest airports. Carriers across

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Speaker 9: the Persian Girl for extending and unpressed plented blanket flight

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Speaker 9: suspension after Iran targeted airports in its weekend offensive. Bloomberg's

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Speaker 9: Aviation and.

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Speaker 2: Transport report to Danny Lee says it's not clear when

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Speaker 2: the disruption might end.

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Speaker 4: We're looking at.

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Speaker 10: Around thousands of flights today being canceled in and out

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Speaker 10: of some of these key transit hubs, particularly to buy

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Speaker 10: the world's busiest international airport for for transit travel and

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Speaker 10: that also extends to Abu Davi and Doha. So with

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Speaker 10: the region's airspace also being closed, it really means that

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Speaker 10: the airlines cannot operate in the Persian.

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Speaker 4: Gulf danny Lee.

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Speaker 2: As the disruption also extends the flights which would normally

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Speaker 2: pass through the airspace, Tens of thousands of people have

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Speaker 2: been stranded in a region that functions as a global superconnector.

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Speaker 2: The crisis has also hit airline stocks, which have plunged

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Speaker 2: as investors digest the impact of axe flights, airspace closures,

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Speaker 2: and lengthy travel disruptions.

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Speaker 3: Executives and traders have flocked to the Gulf States and

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Speaker 3: recent years, and now they're reckoning with our proximity to

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Speaker 3: danger Our defense systems of intercepted projectiles over the skylines

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Speaker 3: of Dubai and Dabu Dhabi over the weekend, as Iran

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Speaker 3: lashed out at Western allies in response to the United

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Speaker 3: ourb Emirates has closed its embassy in Tehran and withdrawn

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Speaker 3: its diplomatic mission. Bloomberg's Aber Abu Omar has.

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Speaker 11: More It's Dubai's nightmare scenario. Hundreds of drones and missiles

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Speaker 11: were intercepted by the United Arab Emirates over the weekend

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Speaker 11: as the wider region heads into disruption with no clear

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Speaker 11: end in sight. Global banks are now telling employees in

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Speaker 11: the city to work from home, and supermarkets saw people

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Speaker 11: panic buying. The question is if the crisis pops Dubai's

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Speaker 11: bubble and threatens its emergence as a hub for finance

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Speaker 11: and tourism in the Middle East. In London, Abira Borwel,

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Speaker 11: Bloomberg Radio.

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Speaker 2: So those are our top stories for you this morning.

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Speaker 2: In terms of the market reaction, brentfrud opened in London

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Speaker 2: early this morning by surging thirteen percent. Currently, break crewed

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Speaker 2: futures up by seven point two percent, seventy eight dollars

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Speaker 2: twelve the Bowel. We have also seen US stock futures

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Speaker 2: jump this morning, stock futures slumping one percent for the

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Speaker 2: S and P five hundred, ustocks fifty futures also down

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Speaker 2: by one point seven percent. The MSCI Asia Pacific Index

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Speaker 2: sound by one point six percent given this major conflict

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Speaker 2: in the Middle East. In terms of energy, shipping, defense stocks,

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Speaker 2: they've all jumped higher, Airline and hotel stocks have dropped.

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Speaker 2: The Bloomberg Dollar Spot Index is up by four tenths

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Speaker 2: of one percent, and safe haven assets including gold and

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Speaker 2: silver have also surged. Bullion currently is up by one

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Speaker 2: point nine percent, and will it also mean a surge

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Speaker 2: in treasuries. Tenure treasury yields this morning at three point

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Speaker 2: nine six percent, up by one and a half basis points.

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Speaker 3: Those other markets, we have full coverage of developments and

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Speaker 3: then Middle least for you this morning, the latest from

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Speaker 3: the region in just a moment, plus analysis from Bloomberg

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Speaker 3: Economics and what it means for oil markets and economies

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Speaker 3: across the Gulf. But even after the NonStop reporting by

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Speaker 3: our colleagues over this weekend, it's difficult to grapple with

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Speaker 3: how significant a moment this is not just for the

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Speaker 3: Middle East, but for the world in general. This Monday morning,

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Speaker 3: we have a whole series of unresolved questions, from what

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Speaker 3: happens next in Iran, what it means for the reason

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Speaker 3: for hobbs like Dubai, for the reach of US military power,

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Speaker 3: plus all of the global economic effects oil and gas markets,

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Speaker 3: air travel, shipping routes, and much much more as well.

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Speaker 3: This has been a really significant weekend.

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Speaker 2: Yeah, indeed, I mean President Trump's justifications and goals in

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Speaker 2: Iran remain really quite unclear. He offered a whole number

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Speaker 2: of them in his major address at the weekend. This

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Speaker 2: is also the first time the US and Israel have

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Speaker 2: acted in such a coordinated way toppling a leader in

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Speaker 2: Iran with air power alone. That's never been done before.

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Speaker 2: What happens now? Ninety two million people in Iran? What

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Speaker 2: does it mean for the reading in China and Russia

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Speaker 2: have condemned the action verbally?

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Speaker 4: What lessons will they be drawing?

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Speaker 2: Many questions that we will try to get to throughout

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Speaker 2: our programming today.

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Speaker 3: Well, that's bringing you up to date now with the

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Speaker 3: developments in the Middle East this morning, as well as

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Speaker 3: look at some of those questions as to what happens next.

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Speaker 3: But first I wanted to bring you an extract of

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Speaker 3: the interview that arounds Foreign Minister Abasarachi did with ABC

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Speaker 3: News responding to the social media post from the US

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Speaker 3: President saying that Iran should not retaliate. Let's take a listen.

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Speaker 12: We are defending ourselves, and we have every right, every

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Speaker 12: legitimate right to defend ourselves.

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Speaker 6: What the United.

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Speaker 12: States is doing is an act of aggression. What we

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Speaker 12: are doing is the act of self defense. There are

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Speaker 12: huge differences between these two.

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Speaker 3: That's around Foreign Minister of Bassaraichy speaking there. Let's bring

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Speaker 3: in our head of Middle East, North Africa and Greater

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Speaker 3: Russia coverage, Stuart Livingston Wallace for more on this, Stewart,

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Speaker 3: where you are in Dubai. There have been more blasts

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Speaker 3: heard this morning. What is the latest that we're hearing

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Speaker 3: in terms of strikes across the region this morning.

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Speaker 13: It's largely seems to be much the same as we've

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Speaker 13: heard the last couple of days. So, as you said,

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Speaker 13: we have heard those in Jubai, but there's also been

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Speaker 13: similar in Abadabi Doha. There's been siren sounding in Bahrains,

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Speaker 13: siren sounding in Israel, and attacks going on in Iran.

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Speaker 13: And I'm sure it's not just those countries. It's just

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Speaker 13: we don't necessarily know about the other ones yet. I

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Speaker 13: mean to give you some flavor of how widespread it's become.

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Speaker 13: A man at one of its commercial ports attacked yesterday,

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Speaker 13: and by our reckoning, that is now the tenth country

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Speaker 13: that is being simultaneously subject to attacks in one form

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Speaker 13: or another across the region. So I mean, I think

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Speaker 13: it's pretty much unprecedented. And then on top of that,

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Speaker 13: you had the start of attacks on maritime shipping yesterday,

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Speaker 13: with at least two, possibly three vessels coming under attack

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Speaker 13: at the mouth of the Persian Gulf. Obviously, that is

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Speaker 13: having a very significant impact on the energy market. Simultaneously,

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Speaker 13: you had Jebel Ali, which is the largest container port

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Speaker 13: in the region, that suspended operations yesterday. So it's not

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Speaker 13: just going to be energy, it's going to be cargo

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Speaker 13: of all sorts as well. That is going to have

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Speaker 13: that knock on effect.

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Speaker 4: So a widening conflict.

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Speaker 2: But the US President as well as Prime Minister saying

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Speaker 2: that they will continue strikes against Iran. What is the

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Speaker 2: goal in terms of what President Trump wants to try

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Speaker 2: to achieve in your.

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Speaker 13: View, I mean, he wants leadership change. I mean he's

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Speaker 13: made that pretty clear and from the get go. On

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Speaker 13: Saturday when he made his first video posting on truth

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Speaker 13: Social he said that, look, once this monitary campaign ends,

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Speaker 13: he wants the Uranian people to rise up and seize

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Speaker 13: control of the government. And that is something that you

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Speaker 13: know he's said since then, and again obviously from me,

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Speaker 13: is a very point of view. You know, that's been

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Speaker 13: a long term goal as regime change, as far as

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Speaker 13: they're concerned. It's been several decades of being the subject

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Speaker 13: of Iranian action, so there's no doubt that that is

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Speaker 13: the endgame here. Now whether there might be an alternative

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Speaker 13: path through negotiation, you know, people have been talking about

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Speaker 13: the kind of Venezuela model where the top of the

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Speaker 13: leadership gets taken out, others come in and effectively do

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Speaker 13: what the US wants. You know, maybe that is an

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Speaker 13: option here too, and I'm sure there are others that

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Speaker 13: haven't been explored yet. So I don't think that is

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Speaker 13: necessarily the only endgame here, but that is certainly the

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Speaker 13: one that Trump has been talking about publicly.

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Speaker 3: What do we know about what's going on inside Iran?

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Speaker 13: So a mixed bag. I mean, largely the internet is out,

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Speaker 13: so that you know, there have been bits and bobs

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Speaker 13: that are coming out. I mean to give an example,

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Speaker 13: after the death of the Supreme Leader Harmony on Saturday.

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Speaker 13: On the one hand, we saw videos of people mourning

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Speaker 13: his death. We also saw videos of people celebrating his death.

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Speaker 13: So it's very mixed picture about what's happening. And of

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Speaker 13: course it is an enormous country, so to say that

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Speaker 13: we have a comprehensive view of what's happening on the

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Speaker 13: ground would be a folly. I don't think anyone necessarily does.

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Speaker 13: And obviously the expectation, at least from some of the

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Speaker 13: US administration is that maybe this bombing campaign sparks of

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Speaker 13: resumption of those process that we saw in December and January.

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Speaker 13: But again, there's been no evidence of that happening so far.

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Speaker 2: In terms of what is happening with the GCC countries,

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Speaker 2: there have been, you know, waves of Iranian missiles and

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Speaker 2: drone attacks, as you say, that is ongoing today. There

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Speaker 2: has been a ministerial statement out of the GCC saying,

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Speaker 2: you know, confirming affirming the legal right to self defense.

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Speaker 2: What do you think is emerging from UAE, Cutar, Kuwait

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Speaker 2: and Saudi Arabia in terms of how they proceed.

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Speaker 13: Very hard to tell. So, yes, you're absolutely right that

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Speaker 13: was in the statement. I don't think that's necessarily a

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Speaker 13: declaration of hostilities. On the other hand, I think they

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Speaker 13: have been quite shocked. I suppose that the level of

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Speaker 13: Iran has thrown at them. I have to say that

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Speaker 13: their defenses are actually pretty good. There's been several hundred

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Speaker 13: missiles and drones thrown at the UAE but they seem

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Speaker 13: to be repelling something like ninety percent of them plus

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Speaker 13: oh that sort of seems to be the estimate, so

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Speaker 13: they are quite effective and knocking them out the sky.

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Speaker 14: You know.

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Speaker 13: On the other hand, these are countries that are sort

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Speaker 13: of at that international image of being something of the

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Speaker 13: safe have and certainly insulated from regional hostilities, and so

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Speaker 13: that is a little bit of a shock to the system,

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Speaker 13: I think, particularly for the residents here. But in terms

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Speaker 13: of going forward, you know, I think they, like many others,

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Speaker 13: would like some sort of peaceful resolution of this because

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Speaker 13: ultimately they know that conflict is really bad for their

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Speaker 13: economic plans and it's really bad for economic prosperity in

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Speaker 13: the region as a whole. So you know, I suspect

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Speaker 13: they will be pushing again for some sort of diplomatic solution.

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Speaker 3: Okay, Stuart for now, Thank you are head of Middle

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Speaker 3: East at North Africa and Greater Russia coverage, Stuart Livington

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Speaker 3: Wallace and just speaking to the wider regional effects now

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Speaker 3: as well, we've also had reports from the Israeli military

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Speaker 3: of another series of strikes on Lebanon. The AFP News

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Speaker 3: agency says that at least thirty one people have been

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Speaker 3: killed in those strikes on southern Lebanon. Stay with us.

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Speaker 3: More from Bloomberg Daybreak Europe coming up after this.

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Speaker 2: Well, now, let's turn to the economic consequences of this conflict,

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Speaker 2: the ramification for oil prices and production in the region.

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Speaker 2: Bloomberg Economics is chief Emerging markets economists. Ziado joins us

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Speaker 2: now from Dubai. Sad good to speak to you. Let's

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Speaker 2: think about oil OPEC pluses agreed to raise output moderately.

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Speaker 2: How badly will Iranian all output be curtailed?

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Speaker 6: It's too early to tell.

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Speaker 14: I think what we've had over the what we've had

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Speaker 14: so re mark able weekend actionally in the Middle East,

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Speaker 14: but what we've had on the USS reallly side, it

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Speaker 14: probably had a maximum strategy, whether attacks on Iran, an

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Speaker 14: attempt to a successful attempt to kill the Iranian leadership

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Speaker 14: and a broader intense instruction on Iran.

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Speaker 6: On Iran, it did retaliate, and it did retaliate in a.

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Speaker 14: Way that was more than previous conflicts, for example, the

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Speaker 14: June War in twenty twenty five. But what didn't happen,

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Speaker 14: or hasn't happened so far, is physical attacks on oil

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Speaker 14: tankers on a wide scale, but in insulated incidents or

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Speaker 14: an official closure festrate of formus and that is why

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Speaker 14: we've had the increase in all prices that have gone

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Speaker 14: up from seventy two dollars be barrel to seventy eight,

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Speaker 14: and I think that reflects mostly fears of future attacks

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Speaker 14: rather than physical disruption. The WOR could escalate further and

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Speaker 14: it could go another level in terms of the escalation

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Speaker 14: latter if we start seeing attacks on physical oil infrastructure.

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Speaker 3: On the question of the disruption through the strait of

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Speaker 3: horrmonies as well, what about the broader effects beyond the

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Speaker 3: oil market, What about trade? What sorts of effects should

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Speaker 3: we be thinking about as ship owners and tankers are

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Speaker 3: essentially stopping their journeys through that through that choke point, I.

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Speaker 14: Think we have to think about it in terms of

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Speaker 14: two ways. What is going from the Middle East to

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Speaker 14: the world is mostly oil, and it's a lot of oil,

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Speaker 14: and it's an oil that's harder place. Those mention of

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Speaker 14: the opic plus decision. You know, they've increased output by

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Speaker 14: zero point two percent of global supplies. Iran Alon produces

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Speaker 14: about five percent, So it's more symbolic than actual replacement

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Speaker 14: of potential losses. So that's what's going from the region

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Speaker 14: to the world. If you get closure of Hormos oil

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Speaker 14: as the main sort of channel that impacts the you know,

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Speaker 14: that sends the geopolitical escalation of the least to the

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Speaker 14: global economy.

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Speaker 6: When it comes to the region.

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Speaker 14: Let's remember a lot of countries in the region import

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Speaker 14: a lot of stuff, including food, and a lot of

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Speaker 14: it might be coming through straight of Hormos. So for

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Speaker 14: the region, it's important because it's what's receiving from the

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Speaker 14: rest of the world in terms of food, in terms

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Speaker 14: of other imports that might also be disrupted through the

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Speaker 14: straight up formers if there was any disruption through Hormos.

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Speaker 2: Yeah, and in many of the countries in the Middle

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Speaker 2: East have also seen a boom in business. They've become

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Speaker 2: global flight hubs. We've seen these blanket flight cancelations, thousands

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Speaker 2: of passages stranded. Again, this is a major shock to

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Speaker 2: the region. What does it mean in terms of the

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Speaker 2: region global positioning as a transit and business hub.

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Speaker 6: Well, it depends how long the conflict will lost.

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Speaker 14: If you think about historically the Middle East, the Gulf,

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Speaker 14: especially what it provides to the world is primarily energy

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Speaker 14: and there's a question mark by disruption there. As the

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Speaker 14: economy start to diversify it they've become actually quite big

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Speaker 14: important logistics hub, both in terms of airports and in

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Speaker 14: terms of ports, and these have been disrupted now and

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Speaker 14: as you said, the business model for the region is

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Speaker 14: to improve, is to move to other sectors. Now the

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Speaker 14: question is here, it's not the disruption that has happened,

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Speaker 14: and there is some disruption that has happened, but how

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Speaker 14: long that disruption could last for and whether it can

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Speaker 14: basically cause a lasting damage to the region's sort of

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Speaker 14: business model as things.

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Speaker 6: Then, I think the conflict lasts for a few days

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Speaker 6: or a week.

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Speaker 14: I don't think the damage would be lasting, but obviously

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Speaker 14: if it extends beyond that, then there is there is

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Speaker 14: there is an issue that goes beyond oil and energy.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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