Oil Surges Past $100 a Barrel; Khamenei’s Son Takes Power in Iran

Bloomberg Audio Studios, Podcasts, radio News.
Good morning, I'm Nathan Hager and I'm Karen Moscow. Here
are the stories we're following today.
Karen, it's day ten the war with Iran. Once again,
there is little sign of let up on either side.
The US and Israel continue to launch heavy air strikes
on Tehran, while Iran is attacking Israel and Arab Golf
states regularly with drones and missiles. Iran says it can
keep up this level of fighting for at least six months,
but Defense Secretary Pete Hegseth says at some point Iran
will surrender.
We're not flying a mission accomplished banner like George W.
Bush on an aircraft carrier. We're not doing that, and
we haven't done that. But we can be clear with
the American people that this is not a fair fight,
and that's on purpose. Our capabilities are overwhelming compared to
what Iran's are.
In an interview on CBS's sixty Minutes heard Sundays on
Bloomberg Radio, Defense Secretary Pete Hegseth said President Trump will
set the terms of Iran surrender, but former US Ambassador
to Israel Tom Knyde says, it's important to take a
step back.
We ys understand what the objections of this is. How
do we determine what success is that less your success
is nestly called regime change, but one will have to
debate that. And I do believe Congress has a role here, Guyes,
I think it's important for us to understand that.
Former US Ambassador to Israel, Tom Nys was a guest
on our new show Bloomberg this weekend. In the meantime,
the US has ordered non essential diplomats in Saudi Arabia
to leave. That's after a US service member wounded in
an attack over the weekend died overnight, bringing the US
death told a seven. Iran says more than thirteen hundred
people have died in US and Israeli strikes so far.
Sources tell Bloomberg News that President Trump is considering a
special Forces ground operation to see Iran's enriched uranium. That's
on growing concerns it may have been moved. President Trump
says that's something he could do later on, but he's
not considering it right now.
Well. Nathan Iran is signaling no let up to the
war after naming the hardline son of the assassinated Ayatola
Ali Kameni as its new supreme leader. Fifty six year
old mosh Shaba Comenie has deep ties to the Islamic
Revolutionary Guard. Bloomberg Senior editor Wendy Benjaminson says the decision
was not a surprise.
This was the man that the US really expected would
take over for his father. It's the first generational succession
since the nineteen seventy nine revolution, and he seems to
be the kind of guy who will continue in his
father's footsteps in every way.
In Bloomberg's Wendy Benjaminson, President Trump told Fox News he
was unhappy with Mushtambas Comenie's appointment.
Oh Karen Oil has smashed through one hundred dollars a
barrel this morning as the war rages on. Checking nimex
crud right now, it's up nearly fourteen percent at one
hundred three dollars thirty six cents per barrel. Brent is
up fifteen percent at one hundred and six dollars sixty
two cents. The price was even higher earlier, but talks
on a coordinated release of reserves took some heat out
of the market. Steven Stepchinsky leads Bloomberg's team covering energy
in Asia.
I think some of the worrying things that happened over
the weekend is the retaliatory strikes from Iran continued. It
did not look like there was any easing of tension.
In fact, it looked like it was getting worse. The
US wasn't showing like it's going to back down, especially
rhetoric coming out of the White House and from Trump himself.
And then on top of that, you had some major
producers you had quit, and you also had Adnock looking
to adjust or lower their oil production because their inventories
are getting high as they can't export the fuel.
Bloomberg Steven Stepchinsky says the Group of seven Finance ministers
will discuss a possible joint release of oil from their
reserves today. President Trump says one hundred dollars oil is
a quote small price to pay for world safety and peace.
Well, Nathan, oil is not the only thing on the
move this morning. We're seeing a big sell off and
stocks around the world, and Bloomberg John Tucker joins us
with the very latest John, good morning.
And carry US stock futures down over one percent. Japan's
niek plunged five percent the morning, sending that market into correction.
Global bonds they continue to sell off, so that's pushing
yields even higher. About six trillion dollars of market value
has now been a raised from global stock since the
war in Iran began. Investors are pricing in a deeper
and longer lasting supply shock. This is one that could
squeeze growth while reigniting inflation well we know as stagflation.
The dollar has emerged as the haven acid of choice,
with the Bloomberg Dollar Spot Index up almost two percent
since the war began. Now that adds to cost pressure
since oil is priced in dollars, and hell and jewel
of black rocks is that were introduced more unwelcome obstacles
for investors.
Uncertainty about the Fed path, which we didn't have just
a few.
Weeks ago, well, expectations for Federal Reserve. The interest rate
cuts have already been paired back, and veteran strategist ed
Yard Denny has raised the probability of a market meltdown.
As he puts it, the US economy and stock market
are stuck between Iran and a hard place. You know
you York, come John Tucker, Bloomberg Radio.
All right, John, thank you. There's another source of tension
in New York City. Authorities are investigating potential terrorism linked
to two suspects in custody of what Police Commissioner Jessica
Tish says was an improvised explosive device thrown near Mayor
Zorn Mumdani's residence. Tish says the device was thrown by
a counter protester during an anti Islam demonstration.
Witnesses reported seeing flames and smoke as its traveled through
the air before it struck a barrier and extinguished itself
a few feet from police officers.
New York City Police Commissioner Jessica Tish says the confrontation
unfolded outside Mayor Mumdanni's home during a protest organized by
far right activist Jake Lang to quote stop the Islamic
takeover of New York City.
Well in Europe, Nathan Chancellor Frederick Mertz suffered a setback
after his Conservatives lost a crucial state election to the Greens.
The loss is ominous for Mertz, whose authority will be
tested in four more regional elections this year.
Turning back to Mark It's now Karen Bloomberg News has
learned Live Nations close to settling a federal antitrust lawsuit
accusing the company of illegally monopolizing the live music industry.
The settlement discussions have intensified since a trial kicked off
last week. Under the proposed planned Live Nation's ticketmaster subsidiary
would eliminate some exclusivity in ticketing contracts with concert venues,
as well as make some concessions around the use of
its amphitheaters.
Nathan about a confidence for Nvidia. Billionaire Leo Quoguan doubled
his stake in the chip giant to two million shares.
While small relative to his thirteen point four billion dollar
fortune as measured by the Bloomberg Billionaire's Index, the acquisition
is a notable move by Quoguan, whose net worth for
years largely has been tied up in just one stock Tesla.
And this program note, Karen, markets may close on Fridays,
but the world doesn't, and that's why we are bringing
you a new live radio and TV show Bloomberg this weekend.
It looks beyond the daily headlines to the bigger themes
driving politics, business, and Culture joined David Gera, Christina Raffini,
and Lisa Matteo for smart conversations and in depth interviews
that help make sense of the week that's been and
what comes next. Get Bloomberg This Weekend Live Saturdays and
Sundays from seven am Eastern on Bloomberg Radio, Television, and
the Bloomberg Business app.
Time Now for look at some of their stories making
news in New York and around the world, and for
that were joined by Bloomberg's Michael Barr Michael, Good Morning.
Good Morning Karen. The partial government shutdown at the Department
of Homeland Security is being felt by air travelers spending
hours in security lines at airports like Louis Armstrong International
Airport in New Orleans and Hobby Airport in Houston. This
woman waited for hours and missed flights out of Houston.
She says, nerves are fried.
There's a lot of frustration.
You love.
People are variant set kind of pat and.
Frit Here Hobby where they're first parting on to clean wind.
Officials in the early installed flyers to show up three
hours ahead of their flight because of a shortage of
TSA agents. The New York Police Department is mourning the
loss of one of their officers. While helping the US
mission in Iran, Officer sore Fly Davius suffered a fatal
medical emergency and died while deployed to Kuwait. Davius, who
was a major in the Army National Guard, was a
twelve year veteran of the NYPD. The California Public Health
Department is warning the bird flew virus is a serious
problem sickening marine mammals too. Doctor John Schwarzburg, clinical Professor
emeritus at UC Berkeley School of Public Health, alerts Bay
Area residents bringing pets to the beach to beware.
You should be careful when you're approaching other mammals, particularly
if you're going to be, for example, on the beach
and you see a seal, particularly if the seal looks sick,
but a well animal could certainly be infected and spread
the virus versus as well.
The Marine Mammal Center in Marin County reminds people and
their pets that they should not approach live or dead animals.
In Los Angeles, a person fired shots into the home
of singer Rihanna on Sunday afternoon while she was at home. Fortunately,
no one was hurt. A female suspect is in custody.
Global news twenty four hours a day and whenever you
want it with Bloomberg News Now Michael Barr and this
is Bloomberg Karen.
Well, thanks Michael all the time. Now for our Bloomberg
Sports updating. For that, we bring in John stash Hour.
Thanks Darren.
NFL free agents ken begin sunning officially on Wednesday, but
we'll start hearing about some of those signings today. Among
the free agents, quarterbacks like Kyler Murray and Kirk Cousins,
receivers like Mike Evans and tybreek Hill, and a running
back in Kenneth Walker, who was the Super Bowl MVP.
The golf in Florida was won by actually Battilla in
a playoff with Daniel Berger. The Celtics have gotten Jason
Tatum back from that leg injuries. Now played in two
games and the Celtics of one on both It was
one O nine ninety eight in Cleveland to Bloomberg spor's update.
Stay with us. More from Bloomberg Daybreak coming up after this.
Coast to coast on Bloomberg Radio nationwide on Sirius XM
and around the world. On Bloomberg dot Com and the
Bloomberg Business Album. This is Bloomberg Daybreak.
Good morning, I'm Nathan Hager. On day ten of the war,
where Iran President Trump has said there will be no
deal with Tehran until unconditional surrender. Asked what that looks like,
Defense Secretary Pete Hegseth had this to say on CBS's
Sixty Minutes.
This is not a remaking of the Iranian society from
an American perspective.
We tried that.
The American people have rejected that. President Trump called those
wars dumb, and we're not fighting that way.
Defense Secretary Pete Heggseth on sixty Minutes, heard Sundays on
Bloomberg Radio. This morning, we're joined by Bloomberg News Deputy
Washington Bureau Chief Laura Davison, and with us from Dubai
this morning, Bloomberg Middle East Correspondent Jumana Bersecci, the anchor
of Bloomberg Horizons. Good morning to both of you. Juman,
I'll start with you just to give us the latest
on what has been happening in the Middle East.
Good morning, Yes, well, the main news of the weekend
was the appointment of the new Supreme Leader, essentially the
son of the former Supreme Leader, Mushta Bakabenet, and many
are taking that as an act of defiance. He's essentially
a continuity candidate. The IRGC of very very close to
Mushta Bahmenet. They've already pledged full obedience to him in
a statement. And remember this is an individual who was
placed under US sanctions in twenty nineteen. He's been accused
of influencing past elections and very brutal security crackdowns in
the past. And so the fact that he was appointed
and elevated to this position tells you that Iran continued
to be defiant and that the security system, the military
system are going to continue to play a very dominant
role in terms of this decision making around all of
the nuclear and military decisions that be making around the war.
And you know, President Trump has also in the run
up to this deemed the selection of Mushtebahmane to be
an unacceptable choice and has reiterated over the weekend that
they're going to be pushing for a complete surrender. The
fact that the Iranians have actually appointed the son of
Ali Kramene suggests that they are not going to yield
at least eminently to some of the demands that the
US have been asking for.
Let's bring you into this, Laura, because, as Jumana mentions,
President Trump has said he's not happy with the appointment.
He's said that he wanted a personal role in choosing
Iran's next leader. What kind of a response can we
expect from the US now?
The US is looking at a bunch of different options.
You know, Trump went into the weekend saying that he
would be striking different sites in Iran that had not
previously been targeted. We've really seen a broadening and escalating
of the war over the weekend as there's been additional strikes.
The US is also reportedly considering looking at some sort
of special operations ground strike. This would go against what
Trump and other top officials have said in recent days
that they're not in sending any ground troops, no ground operation.
This one would specifically focus on looking at securing the
enriched uranium supplies and somehow taking that away from the Iranians. This,
of course would be you know, a really big escalation
both in terms of exactly you know, the US's role here,
but also in terms of risk that this is a
much risk heer expedition within what's been happening so far,
you know, And this is really as we've just seen,
safety concerns spread across the region. The US embassy in Riad,
Saudi Arabia, they have asked all diplomats who are not
emergency personnel to leave along with their family members.
This is the first of such of those orders.
Not to mention all of the economic spillover effects we've
seen with oil smashing through that one hundred dollars a
barrel marker, and just at least so far today, both
in Europe and Asia, markets really not responding well, which
creates a political for Trump at home.
Well, what do we know, Jumana about the situation on
the ground in Tehran right now, where the possibility is
of the uranium being located and what kind of damage
Tehran has been under at this point.
Well, you know, let me just go back to your
first question. I think, you know, in many respects, to
go back to what I was saying about Mushabahamed, he
does represent continuity of the of the regime and the
very strong presence of the Revolutionary Guard. Course, so from
that perspective, he represents everything that all of those demonstrators
were protesting against earlier this year. However, there's little sign
of the system collapsing from within, and there has not
been any reporting or recent reporting of demonstrators taking to
the streets. If anything, that has been reporting of the
Iranian regime preparing the paramilitary force, the Pasige to get
ready in case people start taking to the streets again. Now,
as for the location of the enriched stockpile, you know,
this has been a question. Is that there's been toying
I think the minds of experts ever since the Twelve
Day War from last June. But satellite imagery even in
the run up to this war, the most recent war,
suggested a bit of activity around the Isfahan site, and
the latest reporting that Laura was just signing there. You
know that US officials are considering at sending a specialized
force over there to help somehow retrieve that enriched stockpile
would take place around the Isfahan site because of increased
detected activity on satellite imagery that we saw on the
run up to the war. So of course it is
very risky and ultimately it boils down to two choices.
You know, if they want to take on that rest
and put troops on the ground to go and try
to retrieve the stock. Well, they've got two things that
they can do with this. They can try to extract
it from the country, which is similar to what happens
in the run up to the JCPOA, or they can
try to dilute. But at a time of extreme war
and targeted military operations with Iran on the offensive again,
it raises a lot of question marks about sort of
what the security situation would be if the US were
to commit to sending troops or extra personnel to Iran
to try to retrieve this uranium.
We're speaking with Bloomberg Middle East correspondent Jumana Borsecci in
Dubai along with the Bloomberg News Deputy Washington Bureau chief
Laura Davison, and just picking up on what Jumana was
saying in terms of the security situation in the Middle
East right now. Of course, we've seen Iran respond to
US and Israeli attacks with retaliatory strikes across the Middle East,
and now the news overnight that the US embassy in
Riod is being ordered in all of Saudi Arabia is
being ordered to get out of the country in terms
of American citizens there. What is the potential now of
a wider war? What is the signal that the US
is sending by essentially evacuating Saudi Arabia.
This is a signal that the US expects that there
will be more strikes, bigger strikes, broader strikes. It was
the same, uh, you know, a similar but more targeted
signal we saw the State Department send before the war began,
you know, just nine days ago, asking uh, diplomats and
non essential people and giving them the option to leave
some of the embassies in the region. You know, these
orders are essentially a precursor for an expectation that that
things will get more dangerous, not less. And this is
kind of the same sort of uh, you know, a
sentiment that we've really seen ripple across the globe today
of you know, both from the on the market side
as well as from the diplomatic and geopolitical side, realizing
that this is likely not going to be a short
term conflict and that this is something that will last weeks,
if not months, but there's no really clear end in sight,
you know, with both sides, both Iran and the US,
saying that they you know, want the other side to surrender.
They're not willing to negotiate, and there's no clear out yet,
particularly because the US has not articulated what it sees
as success here. Trump has talked about regime Shane, She's
talked about aaran being disarmed, but there's been no clear
sense here about what the US is actually seeking and.
The response from the Middle East, as you know, Jumana
has been curtailment of oil production from several countries, including
Kuwait and cutter with the liquefied natural gas. This news
that the G seven might be considering a joint release
from their reserves has taken some pressure off the market
this morning. But what are you looking at in terms
of market impact right now?
Yeah, I mean the oil price moves this morning have
been nothing short of extraordinary. When I was on air
a couple of hours ago, we got very close to
one twenty dollars a barrel where Brent was trading at
around the same time, these reports came out suggesting that
the G seven finance minuts we're having an emergency meeting
to discuss the release of strategic petroleum reserves those sprs,
and on the back of that you saw some of
the gains get erased. That we're still up anything from
ten to fifteen percent today, and so this really does
speak to tightening physical supply. And you know, speaking too
many experts in the industry, the analysts around, the main
problem here is not necessarily the fact that these sites
have sustained a lot of damage, because they haven't. They
can still produce if they want to produce. The issue
is getting the oil and the gas and the other
products derived from gas out there and through the Strait
of Hormos, and so that is the major concern here,
and effectively what it means is as long as the
Strait of Hormos remains effectively closed for the safe passage
of vessels, you're going to continue to be in a
situation where many of these key OPEC producers are getting
increasingly concerned about their storage getting filled up, and they
have many of them announced that they are either cutting production,
slowing down production, or announcing force measures with some of
their key customers. This morning, Bahrein also joined the list
of some of the refiners in the region that have
announced the force measure with their customers. So this squeeze
the physical squeeze on the market doesn't seem to be
letting up, even though the announcement and the potential release
of SBR from an oil perspective could help ease some
of the upward price upward movement at price.
Thanks to both of you for this. Bloomberg's Jumana bursseci
with us this morning from Dubai along with Bloomberg Deputy
Washington Bureau Chief Laura Davison Karen Nathan.
And stocks are tumbling as the war in the Middle
East fuels turmoil and energy markets sending oil above one
hundred dollars a barrow for the first time since twenty
twenty two. Bond losses are accelerating while the dollar hits
its highest level since January. SNP futures they're down nine
ten seven percent, down sixty two points Down Future is
down one point one percent or five hundred and twenty
four points, and NASDAK future is down one percent or
two hundred and fifty five points. We're joined now by
Efan Devitt, Senior investment advisor at Monetti Group and Efan,
good morning, thanks for being here. You say the oil
price shock is this story of the week, But is
this a short term story. What if this drags on.
Would very well be a short term story. We don't
know yet. That is exactly the uncertainty. I'd say, if
we look to predictions, say that's built into inflation expectations,
they may be stale now, but nobody foresaw this shock.
As you mentioned the spike and oil and the rest
of the picture for inflation was looking quite subdued up
to now. We had based our interest rate expectations on that,
and the consumer was feeling relatively complacent based on that.
This of course is a shock, and we know it's
going to just start to have collateral damage throughout different
sectors as importers are affected. And the question is whether
this will come to the weak's resolution that had been
the narrative, and whether this gets dragged on. It's very
much a fluid situation, so I think a vesters are
watching just like everybody else.
Well, a fluid situation. Indeed, you also talk a bit
about shock absorbers and if they'll be effective, So where
should be Where should we be watching to see if
that's the case?
Great, great question, and I'd say there's a retail investor
and an institutional investor in this you spoke about stocks tumbling.
I doubt that the retail investor is already participating in
that they do not have the access to the early
access to be able to make decisions on the fly.
And most retail investors have been coached by their advisors
to stay the course, be more long term, and not
try to practically maneuver here. But where are the shock
absorbers in markets? A diversified portfolio should have exposure to that.
I would say gold is a traditional shock absorber when
there is this kind of geopolitical shock. We know that
gold itself has been a bit distorted by the high
degree of retail selling, so we have to almost put
that on the side for the moment. Cash is a
typical shock absorber, but no investor wants to be in
cash for too long today because they're afraid of missing out.
Oil itself and energy will be a shock absorber. We
can see that we should have had exposure to energy stocks.
We know that energy is an short supply. And then
the AI and tech story, which has been the big
long term shock absorber that has sustained markets for years,
that's got its own cracks today, so that really has
to be on and so so it's not clear where
the traditional shock absorbers are.
But if there is cash out there, will people eventually
see this as a buying opportunity. Should we expect a bouncer?
Is there still some reticence? Says we can't really predict
what's going to happen.
It's a great question, and the million dollar question, indeed,
is whether the cash will stay on the sidelines, particularly
if inflation starts to erode it it doesn't look particularly safe,
or whether there will be that knee jerk reaction to
wish to buy the dip, which is something that we've
seen quite a bit in recent downturns, a very swift
turnaround and desire to buy the dip. We saw that
in the software as a service the SaaS apocalypse. Already,
we have many commentations in a sort of a feeding
frenzy over where the SaaS stocks that are being over
sold are. My suggestion is that because of this strong
need to have growth in a portfolio, there is a
strong need not to be out of equities for too long,
and that's where the equities on the sidelines are.
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