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Welcome to the Daybreak Asia podcast.

I'm Doug Krishnner. The crude oil market

remains volatile given a lot of the

uncertainty around shipments leaving the

straight of Hormuz. 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 straight.

And some of that optimism seemed to come

from ship tracking data showing a

Pakistan flag tanker clearing the

straight of Hormuz. 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. Um, I think that the

market will point to a few different

reasons uh for the lower prices. I think

number one is that release from the

strategic reserves by the IEA and the

way that that's structured. I think in

the US in particular, it's an exchange.

So, it's sort of borrowing from the

future in a way. Um, and so in order to

price that, you have lower short-term

prices and higher longerterm prices once

that sort of gets put back into storage

later on. On top of that, we do have

some tankers uh making their way out of

the straight of Hummus um and heading to

various locations. Um 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 crude uh

coming back onto the market after um

Trump allowed a waiver on the sanctions

there. So that's also helping some uh

countries that are particularly strapped

to get their hands on some fuel. Um and

and and you have the the sort of

alternative supply routes. So we know

that there's a large uh cluster of

tankers waiting to pick up crude on the

Saudi coast in the Red Sea rather than

in the straight of Hormuz. So um I think

it all points to the idea that although

supply is going to be reduced, it's not

going to be completely uh kind of um uh

halted from the oil producers in the

straight of Hormuz area. That said, I

think I would be cautious about getting

too carried away or too excited about

this. You know, we do have prices still

around $100 a barrel. Uh and we do still

have those supply uh curbs and

impingements everywhere. And the fact of

the matter is that the longer this goes

on, the more stock piles around the

world are going to get drained, the

scarcer oil is going to become, and so

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 in the oil market is to push

prices higher, it just kind of addresses

the level of anxiety in the market right

now.

>> It it does and we saw uh in Dubai

yesterday we had the um blaze near the

airport that disrupted flights for a

while uh already. Um, and the fact that

the Iranians seem to be targeting more

energy infrastructure is also a

troubling development that is uh causing

more headaches and and again sort of

ratcheting up um the the 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 uh provide military

sort of escorts, navy escorts to get

more tankers out of the straight of

Hormuz. Um and it doesn't seem to be

getting a very enthusiastic reception in

global markets. So or or in the 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 they're all indicating that they

may be willing to help out. Don't think

the UK was offering much support either.

I mean you can see it both ways and as

as well on that respect because these

are countries that are more dependent on

getting that crude into the global

markets probably than the US is because

the US has energy independence. But on

the other hand people are saying well

you started this well you know you sort

it out. So, um maybe if this goes on

longer term, it will be possible that

you will get to see some of those sort

of uh um convoys going on, but it's

extremely dangerous and precarious and

it wouldn't take too many accidents uh

let's say um for that to be halted

again. So, the idea that that's going to

really help supply the market anytime

soon 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 Straight

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 Hegth 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 the tanker

tracker data seems to indicate that the

ships that have been leaving the

straight of Hummus recently have hugged

very closely to the Iranian coastline.

Um so some people looking at those

movements are suggesting that might be

because um of mine activity uh across

the more usual shipping routes. But

again it could be sort of a a a ruse uh

in order to make it look that way as

well. So I don't think we have any

particularly firm clarity on that. Uh it

is a very narrow channel and if there

are mines in there then they would need

to be cleared before you can get large

numbers of uh ships uh flowing again

backwards and forwards. Uh and so that

would make the situation all the more

dangerous. So yeah we I mean we have a

lot of stresses and tensions and

precarious uh uh arrangements going on

right now Doug. Um and you know the the

crude oil market as you said is is back

up again a little bit already this

morning in Asia's hours. Um and uh 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 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 Chensen

Hang, 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

2027. So this just kind of reaffirms the

optimism that maybe some people have as

it relates to artificial intelligence.

>> Yes, that's right. and that uh had taken

a bit of a backseat as we'd focused so

much on the situation in the Middle

East. So, it's good to hear something a

bit bit more positive um about the the

chip in the AI industry. I think was it

that the MAG7 had entered a correction

um at the start of this week and so we

have seen a little bit of a rebound in

those companies uh now and yeah that's

definitely feeding into the Asia uh

market environment. And I think there

were a couple of deals in the last 24

hours as well in the in the AI space. Um

and so yes, that that had become a

little bit of an underappreciated theme.

South Korea had obviously had a lot of

volatility as the war broke out and very

steep losses in in a couple of days of

trading at least. And so maybe they have

those sort of value seekers uh coming

back out and and and eyeing the the big

chip stocks Samsung SKH Highix. Uh 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

Xiinping at the end of the month, but

Mr. 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, Trump even

floated the idea that maybe China would

like to send some ships as well to help

with the um extraction of tankers from

the straight of Hormuz. I'm not sure

that China want wants to go there but um

the backdrop had so far been very

positive in terms of the uh relationship

between uh Trump and she between the US

and China uh that sort of truce that

have been struck after we saw the big

escalation of the tariffs um you know in

April May June last year uh and I think

that you know there were even meetings

between some of the officials over the

past week that on the whole seem to come

out relatively favorably. So the idea

that this meeting has been delayed is

probably you know Trump has more

occupied with w with with other things

bigger uh things that he needs to worry

about right now. And so perhaps uh from

both sides perspective it actually makes

sense to to to wait a second um see how

that situation evolves before uh talking

about what happens next in the terms of

the USChina relationship. What we did

see yesterday was soy uh bean uh prices

falling. The idea being that you know if

Trump and she don't meet then maybe

there won't be some more purchases of US

agricultural products from China uh

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 um

disagreement at this point in time.

>> 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 Krer. President Trump

has requested a delay of his trip to

Beijing. He had been scheduled to meet

with President Xiinping 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 the Strait of Hormuz. Now,

several nations have already said

they're not getting involved, and that

list includes Spain, Italy, Japan, and

Australia. And that's where we begin our

conversation with Mara RDman. Mara is a

practitioner, senior fellow at the

University of Virginia Miller Center.

She spoke with Bloomberg TV host Heidi

Strad Watts and Sheron. that the

narratives are myriad and fastm moving

at this point. But it was quite

interesting that we did see at one point

uh President Trump trying to draw in a

number of countries and allies to help

him uh not with the war effort

necessarily, but certainly the effort to

try and restore energy security and one

of those sort of reachouts 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 I believe that that

is a calculation that China is making.

They while all uh global energy markets

are obviously affected by what is

happening with actions against Iran and

with the closure of the almost the

closure of the straight of Hormuz. uh

China and Russia are two countries that

are if not benefiting certainly hurting

much less uh than all of the countries

in the region than Europe that than

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 uh

ships that are making it through the

straight of Harmuz are Iranian ships

sending oil to China. uh so they don't

feel the same um pressure that other

countries might and even if they did

it's not clear that uh they would think

it was wise to respond to President

Trump's request and I put request uh in

quotes uh in 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 uh closure has is a temporary

closure of its airspace. According to

the uh the news agency there, the

official news agency uh we are also

hearing that it's a quote exceptional

precautionary measure that's been taken

to close that UAE airspace. We know that

uh even in the last few hours we had the

drone strike uh that affected the UAE

gas fields and the suspension of

operations there. So things continue to

play out even as there'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

offramp? Because it doesn't seem like

the two sides are getting much closer.

>> Yeah. Well, I think it's not uh imminent

as in uh within the next day or two that

we're on an offramp, but President Trump

is clearly going to be faced with a

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 to

pull back, to take the exit ramp, as you

say. Uh but if he does so at this point

he's doing he's doing this knowing that

he is leaving um a significant a and not

insignificant amount of highlyenriched

uranium that essentially is very close

to or is cons per 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 uh with

Iran, United States, Europe, others um

with Iran to restrict their enrichment

of uranium. But so the the decision

he'll have to make is whether he

continues going forward, puts US troops

on the ground in a highly risky uh

situation to try to capture that

highlyenriched uranium or if he finds a

way to declare victory sooner, but

leaving behind a very unstable

situation.

Yeah, 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 justified

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

Iran right now to sort of gauge how this

could unfold?

So I'm worried about uh drawing

parallels to past uh 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 uh is a

willing a willingness and ability uh to

shape

facts to uh 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 offramp. open question

on his ability to to talk with Israeli

leadership, with Prime Minister

Netanyahu about how and if they would

pull back as well. Uh so it's it 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 um

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

about 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 Takayichi is supposed to meet

with President Trump this week on a very

very high stakes conversation where the

US is asking them for maritime support

to a pacifist country.

Uh so my perception is that global that

leaders throughout the world are wary

and for good reason. Uh 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 uh I would

say very savvy in how they have

interacted with President Trump uh to

have him feel like his interests are

being served and yet also be able to uh

to manage their own. And I would

anticipate uh that kind of interaction

continuing.

>> That was Mora Rdman, practitioner,

senior fellow at the University of

Virginia Miller Center, speaking with

Bloomberg TV host Heidi Strad Watson.

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

stories 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 Krer and this is Bloomberg.