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