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In Washington after Bloomberg reported via sources familiar with the matter, that a ceasefire agreement has been reached between Israel and Hamas, although we should point out we just got a statement from the Israeli Prime Minister Benjamin Netanyahu's office saying there are still several unresolved points in the outline of the ceasefire and hostage release agreement, and they hope the details
will be finalized tonight. Of course, these developments follow what had been days of signaling from officials in the Biden administration that things were getting closer, including Jake Sullivan, who told our colleague Jenny Letterd this at a visit to Bloomberg at the beginning of this week.
I think the pressure is building for Hamas to come to yes. I think Israel also has achieved a huge amount of its military objectives in Gaza, and therefore they are in a position to be able to say yes. So there is a distinct possibility that we can get this deal done this week.
You heard that here and saw it on Bloomberg on Monday. Here we are on Wednesday with reports of a breakthrough here and joining us at the table is the leader of our national security coverage in Washington. Bloomberg's Nick Wadham's. Great to see you, Nick. I know you're extremely busy
at the moment. These headlines, though, coming from the Israeli Prime Minister's office, make us wonder what's really going on here, and it brings us back to May when Joe Biden announced what appeared to be a comprehensive seven point plan, only to be frowned on by Benjamin Netanyahu. Is this deja vu? Or is this a real breakthrough?
Well, you know, up to about I would say, five minutes ago, we thought this was a real breakthrough. I mean President Elect Trump announced on truth Social he had Chuck Schumer from the Senate floor saying he'd just been informed by the administration that they had a deal. We and many others were told by US officials and folks in the region that the deal was done, so it's unclear whether these comments from the Prime Minister are some sort of face saving exercise or really mean that this
deal is now being frozen in its tracks. I mean, what you are going to see here, though, is a test because President elect Trump has essentially in the last few minutes taken credit for this, saying it was his election in November that meant this deal could be done. And a big part of that narrative is that he was finally really able to put the squeeze on bb in a way that President Biden was not. So now that Israel seems to be equivocating a little bit, we've got some more reporting to do.
It looks like well, and we'll let you get to it in just a minute, Nick, But while we have you this notion that obviously nothing is done until it's done. It also isn't a permanent ceasefire until it is one, even if they can reach an agreement tonight on whatever this temporary.
Pause will be. Is this really the easier part.
Than figuring out a way to fully end this war on a permanent basis?
Yeah, I mean, this is such a heavy lift in so many ways, in a depressing way, this really is the easiest part. I mean, you have a pause in the fighting, you have a release of some three dozen hostages. Presumably the fundamental equation remains unchanged. And we've spoken about this many times. Israel has said no halt to the
war until Gaza is freed of Hamas. You had Secretary of State blinking yesterday, I believe, essentially saying that they believe Hamas has managed to recruit almost as many fighters as it's lost in this So Hamas appears to remain, at least in the US view, somewhat undiminished. Where does that leave us? How do we transition then? If Hamas remains in power, and net and Yahoo insists that Israel won't stop until they're out of power, those are questions
no one has been able to resolve. But at least for the time being, it does appear that we would have a halt. That then the US would try to sort of spin or seek to get momentum from to bring a lasting ceasefire that could bring a permanent into this conflict.
That would also, though, mean those concerns you outline a continuation of the US military presence in the Middle East, at least of the level we have now that's right.
I mean, there's there's absolutely no question that the US is going to maintain that presence President elect Trump. You know, he said just a few days ago, listen, if this thing is not wrapped up before I get into office, all hell is going to break loose. The idea was that, Okay, Hamas presumably listened to that and was felt some pressure that you know, no way out. Also he would have
leaned on net Yahoo. But I mean, I mean, I do think when you look at the underlying force posture and strategic deployment for the region, and things are not going to change. We are not backing down. The US is not bringing people back, and it's forced posture is going to remain very high.
As we are now just days away from Donald Trump's inauguration, Nick, We've had conversations with multiple national security experts, people focused on the Middle East, who have suggested that Donald Trump is inheriting what has a dramatically weakened Iran, and I wonder to what extent the weakening of Iran is attributing to the timing here as well. Knowing that Israel was able to dismantle a lot of the infrastructure and take out most of Hesbalah leadership in addition.
To everything it's been waging with Hamas.
Is this deal likely to go forward if Iran isn't saying, Cammas, you do kind of need to do this.
We can't back you up in the same way.
Well, I mean, Iran's role is a huge factor here, and yes, I mean a big element in this is that Hamas seems to be much more isolated than it was. I mean, you have Iran, you have Hesballah, you have Sirious. So all of these dominoes have fallen and that has fundamentally changed Hamas's calculus. So whether or not they say they're going to give up the fight permanently, there is no question that Hamas has been seriously weakened. And that is a direct result of the fact that Iran has
also been very seriously weakened. And you know what's to come. Trump has promised a reimposition of maximum pressure on Iran, so you can expect to see his administration really tight in the economic screws on them.
All Right, Nick Wadams, I know you got work to do, so we'll let you go leading our national security team in Washington. Thank you so much and we want to get more on these developed developments. Now in turn to another expert in the region, Garshamali is with US former director for Syria and Lebanon at the National Security Council, now founder and CEO of Greenwich Media Strategies. Welcome back to Bloomberg TV and Radio.
Hagar As.
I'm sure you just heard us describing we have sources saying that yes, there is a deal in place. The Israeli Prime Minister's office, though, seems to be saying not quite so fast.
Do you think this one's real?
I do think this.
One is real, And for the last few days I've been saying that we've never been so close. And the reason for that is that you have a lot of moving parts that have converged. I know that you're going to see president like Trump take credit and Biden take credit, and they're each going to, you know, thump their chest about it. But the fact is that you had a lot of different factors feed into this. The most important is the shifting geopolitical dynamics in the Middle East, and
that really accelerated after the fall of US side. That's really what shifted Hamas's view. Suddenly they were completely alone Hamas is nothing without its backers.
So now you've got Iran is on the defense.
Hasbella's been decapitated, and when us AT falls and therefore their land bridge to Iran is also gone, Suddenly they were on their own. And back in December, that's when Hamas started to accept terms of this deal that they were not willing to accept before, namely with regards to Israeli military presence in Gaza, particularly on the Egypt Gaza border.
And so that's when you saw them shift their tune.
Of course, the maruhu're coming from Biden and Trump, each for different reasons.
Biden wants one last success. Trump doesn't want this hanging over his head. That plays a significant role as well.
But it's really all of these factors that played into this, and that's also why I believe that this will find, this final push will go through.
Ugard's great to see you, and we appreciate your being with us here in the clutch with breaking news. I wonder if it's possible, though, that really we needed both sides to be working this negotiation and maybe both deserve credit. Donald Trump and his news conference last week, stood there with Steve Witkoff talking about the progress that they had made. Did it in fact take both administrations if you will.
I'm a believer in that. That's my own opinion that it's both.
That a lot of the success can be attributed to the fact that you have both working on it for different reasons, with different messages that complement each other. Because on the Biden side, they've been working on this for well over a year.
They've been pushing these parties.
They know these negotiators, they know all the issues, all the concerns, all the needs, and they've been working this.
But when you have Trump coming into office, someone who's notoriously erratic, unpredictable, who assassinated Iran's a general costum Soulimani in twenty twenty, that shifts things because that instills a little bit more fear on one hand on the objectionable actors like Hamas and Iran, but also Trump is able to twist Netanyah, who's arms a bit further because Nettan Yah, who simply likes him more, and we've seen that play
out many times. And a lot of that could be attributed to Trump's first administration and the policies he pursued toward Israel back then moving the embassy to Jerusalem, recognizing the annexation of goal On Heights, and so on. And so when you've got the mix of the two of them, it plays very well for a situation like this. And by the way, allegedly Steve Witkoff himself said that said something to that effect when he was in Israel.
The Israeli Pressed for the last.
Few days has said that Steve Witkoff said that Brett McGirk out in the region that he was leading these negotiations. They have been working in tandem for the last couple of months because the Biden administration has an interest in passing on their plans, of course to the next administration.
That's just simply how it always works.
But they've been working on both of them, and their messaging has apparently been different. Is there very Pressed, for example, said that Steve Whitkoff in his meetings said you better get to this deal or else to Israel by the way, Tantanyahu did specifically.
So the mix of those messages.
And goals I do think plays really well, and I agree with you they could both take.
Credit for this.
Well.
So as we consider which administration is ultimately going to take credit or whether that credit will be shared. Obviously, it's not just about the presidents, but others, including for example, the Secretary of State Anthony B. Lincoln, who actually talked about the circumstances with Hamas in particular and whether or not this war could turn, this war with Hamas could
turn into something everlasting. He spoke at the Atlantic Council yesterday. Hgar, this is what he said, and we'll have a respond.
Each time Asrael completes its military operations and pulls back AMAS, militants regroup and re emerge because there's nothing else to fill the void.
Indeed, we assess.
That Hamas has recruited almost as many new militants as it is lost. That is a recipe for an enduring insurgency and perpetual war, so Gar.
It brings us to the question of even if you get a ceasefire, now, even if you can turn that into something permanent, how permanent realistically it will be if Israel's goal of complete eradication of an ideology is not one that can actually be reached.
What you say, you have two issues playing out here, two different but two related factors that could really lead into something a long lasting insurgency.
For sure.
One is the fact that, as Secretary Blincoln was talking about, is the difficulty in reaching a permanent solution. And now, when you have a cease fire, it's obviously great news and it's something a lawed, but this is phase.
If they come to this, this would be.
Phase one of three phases, and the third phase is where a permanent end to this would be negotiated. So the good news is that you've now opened this door to potential future negotiations, but they're obviously very fragile and without real real thinking and buy in by the parties on how the future of Gaza will look and how that permanent solution looks, then it's going to be very tenuous now blinking. In that speech at the Atlantic Council, he did say that for months now, the Bide administration
has worked on a post conflict plan. They've passed that on to the Trump folks, and they've worked with certain partners. There is some smart thinking on this issue, but we don't know the full details of it, so we don't know if those terms are really feasible. They include things, for example, like a Middle Eastern peacekeeping mission that would be there how Gaza would be governed in the future.
But again, very very tenuous, very difficult issues.
Hamas's one goals to survive, so they're not going to take it. They're not going to go down easily. The Palestinian authority or another authority to take control over gozens. It's going to be very difficult. And the second issue you have playing out here is that the way Israel approached the war in Gaza.
Whether you know my views.
I've been very clear about my views. I worked in counter terrorism. I'm more than happy to see Hamas completely decimated. But the way they approached it and the humanitarian crisis that ensued is going to push a lot of those gosins into the arms of the enemy. And that's the problem. So even if you erase Hamas, there is going to be grievances there. There's going to be angst and very recent i mean very fresh wounds there that could lead them to the arms of a different terrorist group with
open arms, just under a different name. And that's why Secretary B. Lincoln was saying that I do think that that's a significant risk, and the only way to go about that at this stage is to plan for a very long peace process. But hopefully if you can include in that a deal that leads to state solution, something where you have the light at the end of the tunnel.
That's the only way you're going to be able to try and circumvent.
Some of that inevitability of individuals joining further insurgent or tear spoofs.
Magarwin our remaining moment here if I can add to the permanent war argument. Terry Hayes at Pangaea out with analysis following this headline, suggesting that this will not lower geopolitical risk. Israel will remain split hamas is not out to Anthony Blincoln's point, battlefields from Yemen to the Red Sea to Lebanon will continue to be regional flashpoints behind it all. Yes, a weekend I ran, but also China.
How much does Donald Trump have to worry about even after this deal is struck, if it's real.
Well, he has a lot to worry about. There's still a lot of work there.
The fact is that with Trump in office, the one region that I have real hope for that I have not had hope for in decades is the Middle East.
That I don't share that for the whole world or for the United States, But when it comes to the Middle East in particular, I believe then the reason for that is that Iran is at the root of most of the problems in the Middle East, whether it's backing terroist groups in Yemen and in Syria and Iraq and Lebanon, or it's pursuing actual terrorists behavior across the region and pushing its ideology and the expansion of it across the region,
trying to compete and become the regional hegemon. So with Iran on the defense this way, and with them knowing that they have a leader coming in who isn't afraid to assassinate one of their generals, that's going to make them behave So I have hope for the Middle East.
But listen, you're talking about it.
We want to share your hope. Agar, come back and bring more hope to us. Agar Shamali with us on Balance of Power. This is Bloomberg.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm Eastern on Apple Cocklay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Blue Whomberg eleven thirty.
This is Balance of Power Life from Washington. I'm Kaylee Lines alongside Joe Matthew. This is, of course the early edition of Balance of Power. But we have a lot of coverage coming up for you throughout the course of today, not just the late edition of Balance of Power, but we will also be here this evening for special coverage of the farewell address of Joe Biden, given from the Oval Office at the White House tonight at eight pm Eastern Time.
It's just one of many speeches he.
Has given or will give this week, as he has just days left in office, five days to be exact.
Jeff addressing the American people in prime time. It's a venue he hasn't used terribly often over the course of these four years. But we're wondering exactly what he's going
to say, Kaylee. With news of what appears to be a possible cease fire in the Middle East, we thought there was a deal and he may well announce one, but after some hedging, I guess from the Israeli Prime Minister's office, We're playing this a little bit carefully here, so I'm guessing that we have a couple of scripts in play, and we're going to talk to our panel about this next. Rick and Jenie are with us, But why don't we start at the White House? Bloomberg's Tyler
Kendall is on the North lawn right now. It's an important day there as the staff, the communications department, and the rest prepare for a farewell address to the nation. Tyler, how's it going well, Joe.
The last time that President Biden addressed the nation from the Oval Office, it was back in July when he had dropped out of the twenty twenty four presidential race, and at the time he said there were a few priorities that he wanted to spend his remaining months in office focused on. In one of them was securing a deal for the hostages in Gaza to be released. So as these details start to emerge, we will wait and see if President Biden does end up announcing that deal
and having that be part of these farewell address tonight. However, Joe, as you know, this is largely considered to be his capstone speech after more than fifty years here in Washington. Elected to the Senate in nineteen seventy three, and Caylee
mentioned it before. This has been a week of farewell events for President Biden, and for a sense of the tone of the messaging that we could expect tonight, I want you to take a lesson here to how he addressed this State Department on Monday during one of his farewell addresses to the employees there.
Common I took office, our nation had become stronger at home, are stronger in the world, and now America is more capable, and I would argue better prepared, and we've been in a long long time.
Bloomberg News is also reporting that President Biden is expected to talk about the country's economic turnaround, noting how he took office amid the height of the COVID nineteen pandemic. We are also expecting him to teut some of his legislative victories, including the bipartisan Infrastructure Bill, as well as the Chips and Science Act. But of course, Joe and Kelley, as you both know, this is coming against the backdrop
of low approval ratings for President Biden. According it to Gallup, he is leaving office with a thirty nine percent approval rating That is about eighteen percentage points lower than when he took office four years ago.
All right, Bloomberg Tyler Kendall live at the White House for us this afternoon. Thank you so much, And as we look ahead to this farewell address, we want to bring in our signature political panel. Rick Davis is with US Republican Strategists and partner at Stone Court Capital, alongside Democratic strategist Genie Shanzeno, political science professor at Iona University and Senior Democracy Fellow at the Center for the Study
of the Presidency and Congress. Genie just on Tyler's last point about the fact that Joe Biden is leaving office as a deeply unpopular president, can he say anything tonight to help make history view him differently than that?
I'm not sure he can say anything in particular tonight, but I and I don't have hope he will do what I'm advising, Kaylee. But I'm really hoping that they don't go with a litany of accomplishments that we have achieved and a litany of policies and the amount of legislation we've passed, because one thing we know about this administration, they've had a habit of trying to convince the American public to feel something that they simply don't, hence those
low approval ratings Tyler was just talking about. So you know, I am hoping that he could try to do this in a different way, which would be to come to it with a bit of humility and honesty about where the American public finds itself.
And nobody is.
Better positioned to do that than Joe Biden fifty years in Washington, d C. So I think there's a way to do it. I'm not sure he's going to get there, and that is my concern. So I will be watching with you tonight, Kayley, with baited breath, to see if you.
Can get there.
We'll be watching together with Rick and Jeanie. They'll be with us as part of our special coverage, and I'm guessing Rick that this will be fine tuned until the last moment, until it's loaded into the teleprompter. Not unlike a State of the Union, give us a sense of what's happening behind the scenes right now, especially in light of what appears to be a massive developing story in the Middle East.
Yeah, that's right. I mean, there is a paragraph that's probably been altered as we speak around the Middle East peace process. So that's probably one of them that's getting hacked up. But look, Joe Biden is a medaler, right. He loves to take speeches right in the columns, change things right to the last minute. I mean, the worst job in the world is being the teleprompter operator on a Biden you know, campaign or in the White House, because he's getting changes all the way up to the
time they go broadcast. So but these are more refinements. The substance of his administration is baked, right. We know the good news and the bad news. And as indicated, the public is basically checked out on the Biden presidency. He's not going to leave a popular president, but he'll leave.
He'll will leave.
As a president who accomplished many things, regardless of whether you liked what he did or not. And so this is his chance of sort of setting the record the way he wants it and actually blow through a little
bit of the clouds around the economy. I mean, we have the most robust economy of any departing president I can remember, especially one that has an approval rating sub for percent, And so I would think that he would want to try one more time to convince the American public that the economic benefits that he brought to the administration are enduring, will last through the next administration, and that they were done by his policies and his policies alone.
Well, which might bring it back to some of the legislative accomplishments that Genie is not so sure he should be trying.
Too much to talk about.
But Genie, on that note of the economy, something he has long struggled with, how quickly do you think American minds could change their hindsight view of Joe Biden if indeed we do see improvements in the economy, more infrastructure projects actually being completed in relatively short order, or is that all going to be things that Donald Trump gets credit for because he'll be in the oval office next No.
I think overtime people's views will evolve, is probably the best way to say it. On Joe Biden, as they do on all modern presidents, and Donald Trump in office will have the same challenges any president in sitting in the office has. And you know, the reality is is that if Joe Biden rather tries again tonight like Rick is urging him too, It is again like trying to convince somebody who doesn't want to date you, to date you. We've gone through this for the last four years, Like,
stop telling people things are going great. You know, He's Brick's right on the numbers. The economy looks good. But the American public spoke during the election. They are not happy. And it's not just Republicans, it is Democrats as well. And as we just look at what's happening in the Middle East, Democrats in particular are saying two million people forty six thousand people on the Gaza Strip killed. Please stop celebrating these wins. So he's got to be very
careful about how he threads this needle. He's not in an advantageous position. There's a lot we need to thank Joe Biden for, but I think the way in which they do this, he's got to be careful. But I'm not sure he's listening either to his advisors, speech writers, or certainly he's.
Not to me.
So you know, I think we'll just have to wait and see how he.
Tries to do this.
Likely to strike a tone of optimism, I think we can expect Rick Davis, But you know, five days from now, there's another important speech to be delivered, and that's Donald Trump's inauguration speech. We remember kind of the dark, dystopian world he described in his first inaugural address. What do you think they're working on now?
Yeah, we were just getting used to Donald Trump as president in twenty seventeen. In January for his innaugur address, and we're shocked by how dark and dismal he described not just the United States but the rest of the world. I do think he has changed somewhat turning the campaign. He even though I would say, was more pessimistic about the economy. I don't know if that was a device to just make all the things that are bad in
your life. Ne're from Joe Biden, But yeah, it would be hopeful that he talks about his solutions to the problems rather than just an iteration of how bad people have it, because I do think there's a chance he talks past people and how they feel today. When we do look at surveys and especially consumer indexes, people actually feel pretty good about their personal situation. They worry, as Donald Trump has pounded into them, that the future is not bright. And so we'll see this is also his
last term in office. We're now seeing a lame duck president. Leaving office and a lame duck president entering office a first time in our lifetime that we'll have actually witnessed this, And so how does that play out in both men's speeches both tonight and a week.
For about that's something else.
Yeah, well, except that the lame duck president who's entering office will be working with something that the outgoing president hasn't been working with for the last two years, which is Republican control of both chambers of Congress. So realistically, at least in the first two years of what's going to be a lame duck four years, Rick, he still has the ability to get quite a lot done.
Yeah, and look, I mean Joe Biden said he was going to be a lame duck and then change his mind. Let's hope Donald Trump he doesn't have the same options. But yeah, he's got a good run, certainly for the next two years before mid terms, with a compliant House and a compliant Senate. And I think they're doing everything they can to front load this administration in order to do as much as they can in these first two years.
A lame duck on the way out, a lame duck on the way in, Jeanie. A Republican majority of one in the House, how's anything going to get done?
It's going to be hard, And you all just reminded me. I was listening to Pam Bondi's hearings and she was asked by one of the senators, can Donald Trump run again or is he term limited out? And she said, unless we change the constitution, he is term limited out.
So presumably that's right.
But this is actually an enormous concern because you know, there's one thing Donald Trump doesn't dound to be described at because that is lame.
So I'm not sure he's going to like that monitor.
But he did say this is it for him.
There's that he.
Doesn't like that. He doesn't like the Donald Duck thing either, so I'm not sure that name is going to work in either regard, although he did say if elected, we'd never have to vote again. Seriously, not literally. Our panel, we're going to let that one hang there. Jemmie Shanzo and Rick Davis, thank you both. As always our signature panel.
They're going to be back in our special coverage. As Kaylee mentioned eight pm Eastern time, the address we've been talking about after fifty three years in public service, in public life, Joe Biden says, farewell from the Oval Office, and we'll have a lot more on that. It's going to be interesting to see how the speech is written and how it's delivered.
Yeah, especially on the economy, as he is going to be speaking on a day when we got inflation data that at least the market seems pretty happy about.
We're going to get should accomplished here.
I wouldn't go that far.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Kaylee, we are obsessed with the core right, but energy prices are something that we all need to manage, and with crude oil bumping up against eighty dollars a barrel here, there are questions about where we're going in the immediate term and whether Donald Trump can make good on a promise to cut energy prices by half. This was part of the conversation today in one of many confirmation hearings
underway on Capitol Hill. Chris Wright Liberty Energy. We told you about this tap by Donald Trump to run the Energy to Apartment. This is from his testimony in the Senate earlier today.
Federal policies today make it too easy to stop projects and very hard hard to start and complete projects. This makes energy more expensive and less reliable. President Trump is committed to lowering energy costs, and to do so, we must prioritize cutting red tape, enabling the private sector investments, and building the infrastructure we need to make energy more affordable for families and businesses.
Just the right voice for this conversation now is Tom Close Up back with us on Bloomberg, Global head of Energy Analysis at Opus. Tom, it's great to see you, Welcome back. I hope the years start now well for you, and we want to get into a lot of different things here with regard to energy prices and your forecast
for the new year. But based on what you're hearing from the Trump team, which you heard today in this confirmation hearing, on what Donald Trump was saying even on the campaign trail, based on the baseline he has to come into office, is it possible to cut energy prices by fifty percent this year?
I don't think it's possible to cut a buy fifty percent. But I think that he set out for a reasonable task. I think you'll hear them talk about three million barrels of oil equivalent in the Trump term, and that's actually like me shooting under one hundred golf. That's not a herculean task because we'll probably add about six hundred thousand barrels a day under normal circumstances. We'll add plenty of natural gas, and then gas liquids get attached in that.
So that's a reasonable view half the price. No, And as a matter of fact, right now, inflation is alive and well in the oil business. We're up about eleven or twelve percent so far in twenty twenty five. Nothing to do with Trump policies for the most part, although a lot of nervousness and uncertainty about what the tariffs might do to prices.
Well and how much of what we've seen most recently tom is also attributable to the tightening of sanctions on Russian oil, specifically that the Biden administration has finally agreed to in its waning days.
Yeah, that's part of it. These sanctions for the first time really have teeth. Remember when Russia invaded Ukraine, we thought that, oh, they were going to have impede impediments of several million barrels a day of the crude they sense of the world. What happened was it just got re routed and China and India took most of it. This time, it looks as though it might be a cutting production by about seven hundred thousand barrels a day,
So for the short term, that helps. The other thing I have to really emphasize is that we're in the season where oil prices go up. Oil prices are not like a Tarantino movie or you know, a movie by the Coen Brothers. It's more like you know the Hallmark movie where you know the plot pretty much when you tune in, and the plot for the first one hundred days of any year is usually for higher prices. So I think we're going to go onward and upward in
this first hundred days. Will be above eighty for WTI shortly, and will probably be in the mid to high eighties for Brent. But then this is a front end loaded year. I mean, by the end of the year, and perhaps the Trump administration may take credit for this, we're going to see a lot lower prices in the second half of the year than what we see in the first hundred days.
All right, so no plot twists coming in the immediate term, Tom, I wonder we've been asking about oil here should we be asking you instead about natural gas. Everyone is submitting the President elect to lift the moratorium on LNG exports. Is it going to be boom times this year?
I don't think so. I think those are mostly you know, a lot of the things that the Biden administration did were you know, we're measured, you know, in terms of it doesn't really makes sense to have a moratorium on LNG when we are going to be the Saudi Arabia, Russia, US, and Persian Gulf of the world for natural gas. The thing the watch about natural gas is this, we have plenty of it, and we have plenty of it in
the ground that we can bring to market. But when you get a cold winter in the northern hemisphere, and this really qualifies as a cold winter, you can have all sorts of problems. You've got plenty of gas natural gas in Henry Hub, but you don't have it in
New York, Boston, Chicago and places that need it. For commercial businesses, there's a really good chance next week that we're going to have what they call natural gas urtailments or interruptions, where you know, maybe you're a pizza parlor and you get cut off on natural gas when the residents and the hospitals and the schools eat it. And when that happens, a lot of those commercial customers turn to oil and they buy diesel, jet fuel, kerosene, heating oil,
you name it. And there really looks like there's a good chance that we could get a little bit of a sticker shock for some of the middle of the barrel products next week.
Well, of course, next week also brings with it the inauguration. To get to where we started this conversation, the impact that Donald Trump's administration will have. You mentioned in your first answer Tom this question around what tariffs ultimately are going to mean, and that in theory points us toward Canada, where the US is getting a lot of this product from.
What would happen if we were to see a twenty five percent tariff implemented on all Canadian goods, energy products included, What would the immediate translation be on prices here in the US?
The immediate translation would be the Canadian companies would really suffer. I mean they are stranded producers. Now. Some of the refiners in the US Midwest and in the Rocky Mountains are stranded customers, and they need Canadian crew to run on. You know, there's a lot of US crew. But it's very very light, and it's very very sweet, and it makes too much gasoline and propane and buttane and things
like that. So we're very dependent on Canadian crude. I got to tell you, I don't know what's going to happen. I pull it the circus of uncertainty, and I don't know which of the three rings is going to be open because we don't know how they're going to collect the twenty five percent tariff. I assume that it would be on Mexico as well. But I think ultimately it moves into that narrative of higher prices in the first one hundred days of the year, and then the market
will make an adjustment for it. I mean, Canadian crude, which sells for about thirteen dollars under WTI now may sell for thirty dollars under by the time the second half of the year comes around.
Tom we're just getting some breaking news regarding the ceasefire agreement between Israel and Hamas. Both Cutter and now the White House have said an agreement has been reached and a ceasefire will begin on Sunday. A statement just released from the White House show says after many months of intensive diploma to see Israel and Hamas have reached a
ceasefire and hostage deal. This deal will halt the fighting and Gaza surge, much needed humanitarian assistance to Palestinian civilians, and reunite hostages with their families after more than fifteen months in captivity. And we will hear remarks from the President on this pretty soon.
He says, I will speak more about this soon, Kayley, suggesting he may be speaking from the White House ahead of his scheduled farewell address which is at eight pm. While we have Tom close on the line, Tom, you may or may not have seen this coming. While it lowers potentially the political temperature in the Middle East, what does it mean for energy markets? Is this good news or a non factor?
It's probably a non factor. Here's the interesting thing. When the Moss War broke out on October seventh, you didn't really see much of a reaction in oil, and I would submit that oil has really lost a lot of the speculative flavor that had had oh back with the Arab spring years or back in two thousand and seven, in two thousand and eight. There's so many better places
to sort of speculate about price appreciation. You have crypto, which is probably attracting about four trillion, and you have big tech, and those companies didn't exist when crude oil futures first started, and now they're worth about seventeen trillion dollars. So we never really saw the positioning go to where people were betting on higher prices after the massage Israeli war.
So I don't think there's much of a reaction now that there's peace and God, we all hope that this is a lasting piece in the region.
All right, Tom, thank you so much for joining us. Tom close, of course is with Opus.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and five pm. E's durn on Apple, Cocklay and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, Play bloom at eleven thirty.
Here in Fortress, Washington. It has been incredible to try to get around here. And if you're coming to the inaugural I'm going to give you a big warning right now. You won't even recognize it. With thirty miles that's three zero miles of security fencing, that's like ten twelve feet tall, the big black the stuff they put around the Capitol for January sixth, it's basically wrapping the whole city. The
streets are being closed and Washington is ready. When I came in this morning, an army I don't know where they get these guys, but an army of people shoveling snow drifts off of Pennsylvania Avenue to make room for more security gates for the big inaugural parade. We'll be ready for you when you get here. Confirmation hearings taking place on Capitol Hill as we speak. And now we got the big breaker. You gotta love Bloomberg. I know
you do. That's why you're here, whether you're on the radio and satellite radio, YouTube, maybe you catch us on TV. If it was on Monday, you knew what was coming today because Jake Sullivan was here the President's National security advisor to let us know what was happening with the potential ceasefire in the Middle East. Remember here's what he said.
I think the pressure is building for Hamas to come to yes. I think Israel also has achieved a huge amount of its military objectives in Gaza, and therefore they are in a position to be able to say yes. So there is a distinct possibility that we can get this deal done this week.
This week, here we are on Wednesday, ceasefire just announced. If you're joining us, Israel and Hamas have agreed to a deal now that brings at least a temporary halt to the war, of course in Gaza, but also means the release of hostages. More than fifteen months of fighting under their belts. Now there is little left of Gaza, and we're looking at the potential for some thirty three hostages now to be released. We have a lot of questions about this, of course, details is the President going
to talk later today. We'll be talking to some smart people about it along the way. But from a military standpoint here and from a national security standpoint, we have a lot of questions, and that's why we're lucky to be joined by Rebecca Grant, vice president of the Defense Program at the Lexington Institute. Rebecca, it's good to have you. It's been too long, and we welcome you back to Bloomberg.
I wonder your thoughts here. As I mentioned, after fifteen months of war, in many cases with support from the United States military either by way of intelligence, we've seen a couple of counter attacks against Israel from Iran in this time, all going back to October seventh. What are the lessons learned here for the United States from a military standpoint?
Well, this is such a big achievement, and none of this would have been possible without the thirty to thirty five thousand US forces that have been deployed to Central Command. That augmentation started right after October seventh, twenty twenty three. It's involved, for example, five different aircraft carriers that have rotated through to keep a lid on Iran and to assist Israel in their defense against Iran's missiles. So a
ton of credit to the US military forces. They're all branches, air force, fighters, bombers, you name it, really helping to keep a lid and then give the pressure on hamas well.
You were last here, Rebecca, right around the time we were sending an additional carrier strike group into the regions. So I know that you're steeped in all of this. Will we maintain a similar footprint, a similar posture following Joe Biden's departure from the White House and following I guess the implementation of this cease fire.
Deal, and that's going to be one of President Trump's biggest set of decisions, what to do with the Mid East force posture. I don't expect any changes right away, because we'll want to keep the destroyers there that do balistic missile defense. We're also still guarding the Red Sea shipping lanes, and then we're doing force protection for our own US forces in Iraq, and then there's always Syria.
But longer term, what President Trump wants is peace in the Middle East built around the normalization of relations between Saudi and Israel, and this Trumpet presidency, we need to see a smart and calculated draw down of US forces in the Middle East so that they can go to other places in the world where we need them, China if necessary.
Over the course of this fifteen months, the US policy in Israel became very controversial, among progressive Democrats many others who were critical of the Biden administration approach, specifically here when it came to essentially allowing in their words, and I know that this is very controversial, but allowing civilian deaths even as we provided military support to Israel. I know Joe Biden urged restraint repeatedly in caution in his
meetings with Benjamin Netan Yahoo. But at one point there were lawmakers Rebecca threatening to hold back or change to some degree lessen our military support to Israel, in fact, stall the shipment of weapons programs until certain conditions were met. Are those lawmakers going to be silent in a Trump administration? I'm assuming this is going to be all in on Israel.
Well, I think that what we've seen in the end is very strong support for Israel. It's been a tragic war, of course, but remember it's Hamas that put their military capabilities in amongst civilians and led to that in the end, we did not stop shippments to Israel. Quite the contrary, We've continued to support Israel with munitions, and of course Israel has made great use of the US designed F thirty five that they used as a fighter jet to
take down Iran's air defenses. So Israel's security is paramount. It's the cornerstone of stability in the Middle East. The US is going to continue to support that heavily, and I hope take a lot of lessons learned, particularly in the drone and missile defense regions, from what we've seen Israel do as they have restored Israeli security.
I wonder from a greater standpoint, what your expectation is for procurement reform at the Pentagon under a Trump administration, the weapons programs that we might be looking at the level of spending. We keep hearing Rebecca about the first
trillion dollar defense budget. Ever, Marco Rubio is testifying. A lot of people think it'll be a very easy move for him to become the Secretary of State, but testifying in his confirmation hearing earlier, he talked about the triumphalism that followed the Cold War and the sleepwalking essentially that we did, thinking that, as he put it, all mankind
was destined to abandon national sovereignty. He called it a fantasy and a dangerous delusion, and I wonder how that informs your view on the way this administration will not only approach diplomacy but military spending.
Well, we're all wide awake now with Iran, with the Russia China alliance. Actually, I think Santor Rubio has done a fantastic job laying out the importance of American safety, strength, and prosperity. You know, he's the A plus student of this round of Cabinet nominees and is doing a superb job. And I look forward to his leadership as Secretary of State. But the fact is we are facing a lot of problems around the world and a real challenge in maintaining
US leadership. Back to the military side, defense budgets are big, but in real growth terms they've been flat.
We spend a lot less.
Now on defense than we did back in the Cold War or even in the Reagan build up. So I want to see some smart reform, but I also want to see US invest in technology, to stay ahead in AI, to make the transition to drones and unmanned systems, and of course to pay our service members appropriately.
But look, mcno mistake, We're not going to be.
Able to do a big cut back in the defense budget because our military is our global insurance.
Policy.
Is that simple m Well.
We heard from Marco Rubio on that insurance policy when it comes to China, specifically Rebecca earlier today and the confirmation hearing. Here's what he said.
We welcome the Chinese Communist Party into the global order, and they took advantage of all of its benefits and they ignored all of its obligations and responsibilities. Instead, they have repressed and lied, and cheated and hacked and stolen their way into global superpower status. And they have done so at our expense and at the expense of the people of their own country.
I don't want to get too abstract on you here, Rebecca Grant, but what's the war that we're supposed to be preparing for if it is in fact China that is our greatest threat. I think you've got a picture of an aircraft carrier behind you. There. Is that the approach that we're tanking, we're taking as a carrier, strike groups, tanks, missiles, or should we be building drones and creating new cyber warfare weapons that we've never used.
Well, it's all of the above. And don't forget the space domain, where China is very active and wanting to assert control and China has weapons that can hit our satellites up in orbit. So big picture, I love what sender Rubio is saying. This is now basically official US policy. We know that we let China into the game. They were no good, and we're going to have a big job to get out of it. That starts with military strength, taking lessons learned from Ukraine and applying them to see
control in the Pacific. But it also will really mean a lot of economic steps. I do expect to see tariffs, I want to see AI export control regulations, but also a boost to our great tech leaders. We have a significant lead over China in AI. Keeping that lead is something our big corporations will help us do, and we've got to make sure that we keep it. And then we do have to integrate drones and all this other new technology into what the military calls all domain warfare
to deter China. Yeah, and finally, don't forget China's building more nuclear weapons and they don't do arms control, so we'll have to be very serious on the strategic deterrent side as well.
I need an hour with you, but I only have a minute left. We're going to see a new stealth bomber apparently we heard Pete Hagsith talk about B twenty one. Do we see an next generation fighter under the Trump administration?
I hope.
So we need the B twenty one with a second production site, build more of those raiders. China's real afraid of them, and I'd like to see a Secretary of Defense hegseeth green light the next generation air dominance, the new Air Force fighter that's ready to go. China's already experimented with some of their answers. We want to see that dominant US airpower get the green light.
I saw those images of that Chinese stealth fighter flying around the Delta thing. I thought, if you I don't, is this real? You need to come back soon. Tell us when you're back. Rebecca Grant Lexington institute the perfect voice on a breaking story today. Thanks for listening to
the Balance of Power podcast. Make sure to subscribe if you haven't already, at Apple, Spotify, or wherever you get your podcasts, and you can find us live every weekday from Washington, DC at noontime Eastern at Bloomberg dot com.