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This is the Bloomberg daybreaker of podcast Good Morning. It's Tuesday, the thirty first of March. I'm Caroline Hepgar in London. Coming up today, the US President is said to be considering a rapid end to the Iran war, even as troops continue to arrive in the region. Iran strikes a vessel full of oil just outside Dubai, as the houthis consider a renewed campaign against red sea shipping. Plus a special report on the KGB's successor the FSB tightening its
grip in Putin's Russia. Let's start with a roundup of our top stories. President Trump has reportedly told aids he is willing to end the US military campaign against Iran even if the Strait of Hormuz remains largely closed. According to The Wall Street Journal, the White House has concluded that reopening the waterway would likely extend the conflict beyond
the President's preferred timeline of four to six weeks. Eric Nuttall, who is senior portfolio manager at Nine Point Partners, says the situation is likely to deteriorate further.
If the street does not open, and we need to kill demand. Past scenarios would be when about five point five percent of the global economy global GDP is being spent on oil. That is when the onus is too great and you see real demand destruction that in today's measurement would be about one hundred and seventy seven dollars per girl. That is where we're going if the straid is not opened.
That was Eric Nuttall speaking. Despite Trump repeatedly saying a deal with Iran is imminent, the US has deployed additional troops to the region as the conflict enters its fifth week. On Monday, the President said the US with target i Brainian power plants, oil facilities, and possibly desalination infrastructure if Tehran not reopen the Strait of Hormuz. While Iran has hit an oil tanker fully loaded with crude oil inside Dubai's port in an escalation of the attacks on shipping.
The Kuwait flagged vessel was carrying more than two million barrels of oil when it was struck by a drone. Bloomberg's Romana Bissecci is in Dubai and.
This showcase say is once again the rests that are being posed to vessels to tankers that should choose to pass the street. Iran effectively reminding everybody that they still can harass ships that want to pass through. And if you look at the flow of traffic, there have been a handful of vessels that have managed to make it through, but only ones that have had the permission or received the permission from it around before.
Have Dumana Bassecchi, who added that a fire on the boat has now been extinguished and all twenty four crew members are safe. Tevan has targeted ships and energy infrastructure on several occasions, but the latest attack is the closest to the major port of Dubai and elsewhere in the Gulf. Iran is pushing Huthi militants to prepare for a new campaign against shipping in the Red Sea. European officials Tel Bloomberg, the group in Yemen is considering how aggressively it would
respond to any further US escalation. CIBC Private wealths Rebecca Babin says it could be a critical shift for the market.
If the HOHO theies escalade in this conflict, they have a meaningful ability to actually kind of put more pressure on the market. They will move from a chokehold and the horror most kind of a stranglehold where even the flows that were able to reroute now cannot escape.
CIBC Private Wealth's senior energy trader Rebecca Babin there with Hormuz blog. Saudi Arabia has ramped up crude exports from the Red Sea port of Yanbou. The Huthis themselves are so far split though, on the merits of any campaign, where roughly half of Yemeny's are suffering from acute hunger according to the UN. US Secretary of State Marco Rubio has suggested that the United States may need to reassess
its relationship with NATO after the Iran War. Speaking to Al Jazeera, Rubio criticized what he sees as a lack of support for US operations in the Middle East from member countries. America's top diplomat also took issue with the Alliance for denying access to some European air space and military bases.
And so you ask yourself, well, what is in it for the United States. And I've been a big supporter of NATO. And one of the reasons why I've been a supporter of NATO is because I believe that these basing rights give us leverage and give us flexibility and operational capability all over the world. But if NATO was just about US defending Europe of their attack, but them denying us basing rights when we need them, that's not
a very good arrangement. That's a hard one to stay engaged in it and say this is good for the United States. So all of them are going to have to be rea examined.
Rubio's remarks come as NATO members have largely rebuffed US requests to help reopen the vital Strait of Hormuz, and in other news, China's factories are unexpectedly boosting their output even with the war in the Middle East. PMIS in March hit fifty point four, beating estimates in a sign of growth from the first official data from the period since the war began. That's despite many Chinese factories struggling
with higher cost due to the conflict. The data also shows the fastest surgeon war materials costs and output prices in roughly four years. Beijing lowered its annual economic growth target to a minimum of four and a half percent, the least ambitious goal since nineteen ninety one, and here in the UK, shopers are being worn to brace for a wave of price increases. Bloomberg's un Pots has more details on the survey from the British Retail Consortium.
The prices of goods sold UK stores rose one point two percent in the year to March, just ticking up slightly from one point one percent in February. Food inflation actually slowed during the month, coming in at three point four percent year on year. The Retail Industury survey was taken immediately after the outbreak of the Iran War, with the BRC warning it will take at least three months before the effects of high costs passed through to consumer prices.
With petulan diesel costs already soaring, that will come as welcome relief for consumers for now, at least in Hong Kong. I'm you and Pots Bloomberg Radio.
And those are our top stories. Looking at the market, it's that the Iran driven stock route continues, buyers looking pretty elusive. The MSCI Asia Pacific Index this morning is down by one point two percent. Remember that Dubai's main stock index, the DFM, is now down sixteen percent in March,
so the world's worst performer so far. The costb in South Korea also seeing a significant decline today of three point six percent, but futures actually for Europe and the US are in the green bond markets, Treasury yields easing two basis points to four point three two percent. Oil prices have stalled, with that report on a potential US early exit as one option that President Trump has floated.
Brenkrewed futures currently trading just above one hundred and seven dollars per barrel, Aluminium heading for its biggest monthly gain in two years. Gold and silver seaing gains, gold extending two days of increases. Those are the markets now. President Trump continues to vacillate between saying that the end of the war in Iran is near and also threatening a further escalation US military action. Joining US now to discuss as Bloomberg horizons Middle East and Africa. Anchor Jumana Bussecci,
Good morning, Jumana. President Trump is considering leaving without reopening HOMEMUS. What happens in that case? Do other countries attempt this daunting time? Do they agree to paying up to paying Iran which is their demand? Yeah?
I mean I think it's important just to take a step back here and to reiterate that this is sourcing from the Wall Street Journal. This isn't coming directly from the White House themselves, but clearly the White House are
considering a range of options here. And what they have framed the last couple of days, and this has come through via many calls that President Trump has had with journalists, is that they deem themselves to be militarily very successful and that the operations having gone very well over the
course of the first month. Of course, the lingering issue remains and will continue to be so for the foresellable future, the effective closure of the Strait of Hormas, and so it looks as though they're trying to sort of draw a line between what they're trying to achieve militarily with the war versus the reopening of the Strait of Hormas, and this Wall Street Journal article suggests that he may look to separate the two issues.
Not.
The problem, as you say, is that it is unlikely at this point for there to be a huge uptake of other nations who would be willing to join in
on these efforts. And the Wall Street Journal articles suggests that the first, the first point of call would be for them to try to get to a diplomatic solution with Iran on the street, and if that fails, then perhaps look together, look to put together this so called coalition of the Willing that might be comprising some of the golf Arab states as well, but for golf Arab states, and I just want to remind viewers as well, they have been very vocal over the last couple of days
about how Iran is effectively terrorizing the world via their hold and their grip on the Straits of Hormos. An outcome in which they still have that control is not something that would be palatable or acceptable for golf nations.
Yes, so I think that's very important to understand the view of those golf countries. Is this turning into a loss for the US then a strategic disaster? I mean, what would be the consequences of that.
Well, I think you have.
To also distinguish between military success and strategic success. Militarily, there's no doubt that the US has superiority over the skies. They've managed it, and this is joint US Israeli operations. I should say, they've managed to really incur a lot of damage on Iran's missile capabilities, on their launchers, on their air defense systems, on their navy. So there are
a series of military successes to speak of. Politically questionable at this point whether this has actually resulted in a change of leadership or even not necessarily regime change here, but a regime that is more compliant, at least to the west.
Unclear that that has come through.
There are no signs on the ground of regime collapse, and ultimately, you know, going back to Gulf arb States, the worst case scenario is one in which you end up with an Iran that is angry, that is defiant, and is still maintaining ownership of the street.
So if the.
US were to walk away today, it could actually be perceived, as you know, militarily successful, but strategically not successful, only because you've created an even more ferocious enemy on your doorstep.
Indeed, Jumana, thank you so much for your time this morning. That is Bloomberg Horizons Midle East and Africa anchor Jumana Bassecci on the latest when it comes to Iran. Stay with us. More from Bloomberg daybakeuope coming up after this now to put in Russia, where the successor to the KGB, the Federal Security Service, is tightening its grip on many aspects of Russia's economy and social life. Joining me now is Tony Halpin, who leads our coverage of Russia's economy
and government. Tony, this is a very interesting story that's been written. What are the changes at the FSB that have increased its power so much good?
I mean, actively, from tomorrow, the FSB will have the authority to obtain copies of any organization's databases that it wants to examine without a court aura, and businesses will simply have to ensure that their IT systems allow them to hand over that data on demand from the FSB. And there's very little monitoring of what the FSB will
would do with that information. And although they're under some obligation to destroy it after they've made use of it for their given purpose, there's no real guarantee that will happen. And clearly that has big implications, implications for things like commercial secrecy company's ability to do business without wiring that they may be, for example, submitted to some kind of pressure or black mail by unscrupulous agents. So it's a matter of concern for a lot of companies and a
lot of organizations. Generally, it's not restricted simply to businesses and banks, but any organization at all. And that comes on top of things like the FSB's ability already to order major banks to install surveillance systems so they can monitor messages and other content in banking applications. So it's a very extensive surveilment power.
Yeah, that is very widespread, that is it.
I mean the.
Fsp's also got of course, you can't forget the ability to shut off the Internet and phone lines. It's trying to move away from telegram and get people to use state sponsored messenger platform called Max. What do you think it shows in a nutshell about Putin's control over the country. Why is he doing this now?
Well, I mean it's all part of a continuum in many ways when Putins since about twenty twelve has been slowly tightening the screws ensuring that there's no challenge to his rule. But undoubtedly the war in Ukraine has intensified
that and accelerated that trend. The authorities and the criminal are more and more concerned about public disappointment with the outcome of the war so far, and they're worried about protests, and they're intensifying their scrutiny because they want to be sure that they can snaff out any kind of descent while putting continues as a flaw.
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