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>> Bloomberg Audio Studios. Podcasts,

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>> Welcome to the Daybreak Asia podcast.

[music] I'm Doug Krizner. Iran is being

allowed to sell oil on the global market

under a 60-day license issued by the US.

Now, this move is the result of those

talks in Switzerland as the two sides

work towards some type of permanent

peace deal. It was the optimism around

progress in these discussions that sent

oil prices lower. In New York trading

WTI, we are now trading August as the

most active contract. It was down 2.6%

to 73.86.

And now in Asian trading, prices are

essentially flat. For a closer look at

what's happening in the oil patch, let's

bring in Bloomberg's Stephen

Stapczynski. He is team leader for the

Asia energy desk and he joins from our

studio in Singapore. Thank you for being

here. I'd like to get your reaction to

the developments out of Switzerland and

the waivers now on oil exports for Iran.

How meaningful is this development?

>> I mean, this is historic. This is a big

win for Tehran. And and this means a lot

for the government there trying to get

their oil onto the global market. I

mean, what's very fascinating is is just

how wide these waivers really are. Even

US refiners will be able to take Iranian

oil. This will be for the first time in

in decades.

So, of course, it is temporary, right?

This isn't them rolling back all of the

sanctions.

Um, this was widely choreographed as

well because as part of the interim

peace agreement that was signed last

week, there would be waivers. But I

think the market was still in a

wait-and-see situation. Who would be

able to get the waivers? Who would be

able to get the buyers? And essentially,

you know, it can be anybody as long as

they apply for it. Now, will anyone

actually do it? That's another question,

right? Of course, there will be the the

those those cornerstone buyers like

China, maybe India as well, that will be

looking to get those waivers.

And even though US refiners could do it,

it's unclear if they will. It could be

politically challenging for them.

And and maybe they wouldn't want to

follow through with it. But it certainly

does show that more Iranian crude will

make its way onto the market.

>> I was reading a story on the Bloomberg

terminal that indicated that over the

last week Iran had shipped more than 30

million barrels.

How was the country able to get that

out?

>> Okay. So, there are a few a few

interesting things here. One, there were

a lot of oil shipments that were already

loaded and they were able to get those

out. So, these these vessels were

essentially trapped because of the US

blockade that went into effect a few

months ago and they hadn't been trying

to trying to leave port. The second

thing is

despite the attacks, Iranian

infrastructure is still in in relatively

good shape. Of course, the the US

attacks really

hit a peak in March and they kind of

tapered off over the last few months

when there was the the ceasefire.

But

Iran if there's one thing about Iran

is that they're very good at dealing

with this. They've been able to figure

out ways around sanctions before with

with with dark fleet vessels. They've

been able to get their facilities ramped

up and down very quickly based on based

on sanction regimes and willing buyers.

So, their ability to bring the oil to

the market is actually a bit more

flexible perhaps than other companies

that haven't had to deal with that

before.

So, there actually in a in a spot where

they can ship more. They have the

vessels to do so and now with waivers in

hand it you're going to see those

barrels reaching customers.

>> I'm curious as to whether there are

still uncertainties regarding insuring

this oil. How are the big companies

feeling right now, the big insurance

companies, about applying a policy to a

vessel trying to navigate through the

strait?

>> So, I think one one thing about the

strait is that the

increase in insurance rates and the

unwillingness of of crews and captains

to go through

was one of the big issues

over the last few months. Vessels were

were rerouting their they were they were

U-turning, they were staying in place.

But, now you're seeing more and more

vessels going through, especially in the

last just week.

And it looks like it it appears that

that companies are more comfortable

um

going through. You You not only have

them

willingly, you know, get getting the

insurance figured out, getting lower

rates, getting something that's more

comfortable for everybody involved, but

also they're doing so with their AIS on.

So, that's their transponder. That

shows, you know, if you go to map go on

the Bloomberg terminal, you can see

every single ship on Earth. And for a

while, the ships weren't sending their

location because of safety issues, fears

of being looked at by by policy makers

as well.

They wanted to just go dark and go

through. But, now you're seeing more

ships with their transponders on, which

indicates that you know, they they have

essentially permission from everybody

involved to go through the strait. They

have

They're They're not worried about

security there as well. And what's

interesting is Iran is doing this, too,

right? Iran for a long time, they were

they were They're They're the masters of

the shadow fleet. They've gone dark for

for years because they they want to hide

their location from from sanctioned

those who who monitor them and and and

potentially

secondary sanctions.

But, they have also started sending

their location and they're going through

as well, getting out of of Hormuz. So,

it's it's a very interesting situation

and and it seems that very quickly

there is the industry is far more

comfortable with this waterway than they

were just a week ago.

>> So, I was reading a comment on the

Bloomberg terminal that analysts were

saying the oil market right now is

trying to attempt to return to the

pre-war focus of too much supply. Is

that a fair assessment?

>> I think I think that there is going to

be an an interesting thing happening

over the next

6 months where right now we will

actually go into a slight oversupply in

the very near term.

That's because there are all these ships

you know tens of millions of barrels of

oil that has been trapped within within

the Persian Gulf and that is going to

flood out. You're going to see the

Iranian supply come out.

Iran is going to try to push out as much

as they can.

And this is coming to Asia at a time

where Asian customers for the last few

months they didn't know when Hormuz was

going to open up. So they had actually

figured out alternatives. They had

bought replacement oil shipments. So now

this this flood of oil is coming that

had been trapped for months to Asia to

customers who really don't need it. So

you're going to see a an immediate sort

of

glut if if you want to call it that. Now

that will that will dissipate over time.

And it will take a while for Hormuz to

to really get back to normal traffic

pre-war traffic.

So you might see things kind of thin out

a bit. Companies and countries and

governments are going to refill their

inventories that had been drained over

the last 3 months and that will kind of

suck up some oil from the market and

then you might kind of get into a

tighter market for for a short period

and then after that once Hormuz gets

back to normal and that could take it's

not going to be weeks it'll probably

take months to get traffic back to to

pre-war levels

and get producers producing at the

levels that they were in February then

you're going to see the re-emergence of

this glut narrative and that will be a

longer term discussion where yes demand

hasn't really

been as strong as what some were

expecting Chinese demand has been

relatively weak over the last few months

and it's unclear if that will pick up.

And at the same time, you've got

producers like the United States also

pumping quite a lot.

>> I'm curious. We talk a lot about oil

when we consider the energy market in

the Persian Gulf region, but we let's

not forget LNG. What's happening in that

market these days?

>> Absolutely. Um about a fifth of

liquefied natural gas supply goes

through uh the Strait of Hormuz. They it

was going through the Strait of Hormuz

before the war began and that has

essentially halted. And unlike oil where

you have Saudi Arabia having the

East-West pipeline where they can

reroute their oil into the Red Sea and

through the Bab el-Mandeb Strait to

customers in Asia, there are no

alternative routes for the LNG in the

Persian Gulf and that's um produced by

Qatar

and also the UAE. Um and what's that

that supply had really been trapped and

that had tightened the market and and

and gas prices in Europe and Asia have

had been higher at at some points two

times the price of where we were uh

before the war began. Um but what we're

now seeing is a recovery in the sense

that Qatar would shut its massive Ras

Laffan facility. It's the world's

biggest LNG export plant. They shut that

in March because of an Iranian attack.

It appears that they're resuming

production and resuming exports because

they're bringing in uh a whole bunch of

of empty uh LNG vessels. So, you know,

we've talked a lot about getting oil and

gas out through Hormuz. One thing that's

important is once you get it out, you

got to get the ships back in and if the

ships are returning, that's a key

indicator that these suppliers really

think that the that that Hormuz is safe

and that they can ramp up output to a

degree where they'll have the vessels

available to export the product. And so,

we've seen uh in the last 24 hours four

empty LNG uh tankers go through Hormuz

into the Persian Gulf. They had their

AIS on, so they were they were sending

their location. This is the single

largest uh volume of empty vessels to go

through Hormuz uh since the war began.

So, that's a far positive sign. Uh,

those ships are all heading to Qatar to

pick up shipments. It's unclear when

they will be exported, but just the fact

that they're bringing back some of this

fleet that had been scattered around the

world, uh, is is a good sign that more

LNG will be hitting the market.

>> So, you're analyzing a lot of data, and

I'm just curious about what your

intuition is leading you to conclude as

to whether or not we are at the worst we

have seen the worst of this crisis.

>> I mean, if you just look at the data of

of the ships going through, um, you

know, we are at, uh, you know, I think

over the weekend there were about 8

million barrels of oil that went

through, uh, on on Saturday and Sunday.

The US says that, you know, there were

17 or 16 million barrels. Um,

before the war began on a daily basis,

there were about 20 million barrels of

oil going through. So, we're not at

pre-war levels, uh, but we're we're much

higher than we were before when it was

almost zero on some days. And and a lot

of time there were ships going through

dark, you know, you you have not only

barrels getting through, but you also

have the ships showing their location.

Uh, so, it's much easier to track. So,

this is the best,

uh, output, uh, that we've seen since

since late February. So, the market is

very much in a relief mood. You've seen

oil prices really come down. Brent in

that $70 level compared to $120 where we

were in March, um,

and I think that another key thing,

we've talked a lot about the straight.

Another key thing is there's no

escalation of attacks in the region.

>> Mhm.

>> That is the big fear. If the if if the

US were to threaten Iran

and Iran is backed into a corner, then

they start to attack their neighbors.

And that's what we saw in March. They

attacked They were They were attacking

infrastructure in Saudi Arabia, in

Qatar, in in the UAE. With those attacks

subsiding, now the market is just

focusing on, let's get these ships

through, let's ramp up production, and

get back to normal.

>> All right, we'll leave it there. The

return to normalcy. Bloomberg's Stephen

Stapczynski, team leader for the Asia

energy desk, joining us here on the

Daybreak Asia podcast. [music]

>> [music]

>> Welcome back to the Daybreak Asia

podcast. I'm [music] Doug Krizner. The

World Economic Forum's annual meeting of

the new champions is underway in China.

This event has been called Summer Davos

and it was there we had the chance to

hear from Andre Hoffman. Andre is the

co-chair of the World Economic Forum and

he spoke with Bloomberg's Stephen Engle.

>> Obviously, a lot has happened since you

had the Summer Davos in Tianjin last

year when we were starting to digest uh

the impact of the tariffs from the

United States. Since then, we've

obviously had tit-for-tat retaliation

from China. We've seen inflation go up.

We've had war in Iran. So much has

happened. What do you think is going to

be the top talking point here over the

next couple of days?

>> I think you're absolutely right to set

the scene in such a way and thank you

very much for for inviting me. Uh this

is a very fragmented world in which

there is a lot of tension to try to sort

of separate the greatest aggregates

things.

Uh our main activity at the forum is to

try to find a platform where we can

actually exchange. I think over the

years and you've mentioned that you've

been present at a lot of our meetings in

Asia but also of course

uh in Davos, it is something that uh

we we've earned the trust of coming to

us to discuss about different things.

So, we would would like to define

ourselves as the leading platform of

exchange between business, politicians,

academia, uh all sorts of opinion

leaders and uh now we need dialogue much

more than ever before because

uh geopolitical forces seem to be intent

in dividing us. Uh

Supply chains are shortening. We are

moving away from the different models.

We need to invent a new future. Hence

the the subject of this year,

innovate at scale. How can we bring in

new ideas uh for doing things? I I

the diff- my definition of innovation is

not necessarily technology. It's doing

something that hasn't been done before.

And we need we need to adapt to this

because if we don't do something that

hasn't been done before, we're going to

stay in the same situation, which is not

what we want.

>> Yeah, and if you're talking about

technology and AI, I'm going to be

moderating at least two panels here on

AI, including in the next hour, the

opening panel. And it's really going to

be talking about how to go from all this

piles of investment in AI to scaling.

So, everything not all at once is sort

of the title of that panel, which tells

me that this is a long-term trajectory

and otherwise you risk a bubble really

popping.

>> Absolutely. I mean, it cannot be just

about the next technological innovation

or the next new good ideas. It has to be

about how can we make the benefit of

these new ideas felt by the totality of

people. The forum has

spent a lot of time over the years

talking about the future of work,

talking about livelihoods, talking about

integration of technology and human

lives. And I think that's what we need

to

go and see now. We see a big

technological breakthrough in the AI

application to the business world. How

do we make sure that this feeds through

to society in the broader sense?

>> Right. And again, you know, I talked to

a lot of bankers, senior bankers, and

we've heard a chorus of concern.

Obviously, they want productivity gains,

but there's going to be job losses.

There's going to be ramifications. And

that is something the Chinese leadership

as well is taking on board and concerned

about.

>> Yeah, absolutely.

It could be looked at in both ways. It

could be

seen as a destructive force or it could

be as a contribution to a new economy.

Some of the research we published talks

about an increase of roughly 20% of the

jobs opportunity rather than rather than

going into only the negative. The

enabling our businesses to be able to do

things differently, innovate,

is something that we are going to to to

see percolating through the market force

as well.

>> Where do you think the discussions will

lead as far as where to find it? We've

been doing this every year. Where are we

going to find the engine of global

growth in a bifurcated trade world

coming out of the war as well, the oil

shock that we saw. But we again, we saw

oil prices come back almost

immediately, come down when this truce,

this is a fragile truce, has been peace

deal has been signed. But again, where

where do you find that engine of global

growth when China also its domestic

economy is sputtering?

>> So,

we've been pushing very hard the the

idea that if we pool resources, if we

pool if we pool technologies, we will be

able to create a better world. Now,

we're saying that the geopolitical

agenda is more going towards

fragmentation again, and that means that

we need to invest more into resilience

of our systems. So, the idea is not to

to mitigate the impact of the crisis,

but the idea is to start adapting to it.

And that in itself is a wonderful

opportunity for job creation, for new

economic growth, for for new for new

directions in which the whole system the

whole system could go. I I I give you a

very precise example.

Um

the the the the five-year plan that the

Communist Party here in China has

approved last year

includes a big component of the bio

economy. How can we use nature as

infrastructure and not just as something

that needs to be exploited?

>> Well, that's the your panel that you're

going to be on, nature in

infrastructure. So, I'm curious, too,

whether

you know, there's going to be because of

the war in Iran, there's going to be a

springboard effect, maybe a bit of a

lag, but again, because investment takes

time. But is it going to be a

springboard towards more renewables as

China has really emphasized, or with the

oil prices coming back down

significantly below $100 a barrel, does

it go back to business as usual, and

especially in places like the United

States, a deemphasis on ESG?

>> Yes, so we have we have to put into

we have to break down these different

silos. We're not talking about energy

renewable versus non-renewable. We're

talking about energy need, energy

security, energy independence, and

resilience of our systems. So, there are

a lot of different solutions to this,

and I think that

renewable is a solution for countries

where this this energy is in big supply.

Now, the key to this is to make sure

that we create sustainable systems, and

sustainable system does not mean we need

to cherish nature. Of course, we do need

to cherish nature, but that's not what

we're discussing here. We need We need

to to look into way of creating stable

condition for sustainable prosperity.

And that we can only do if we take into

account planetary boundaries. The

ultimate example is to say that when you

burn one 1 L of oil, you get immediate

benefits, but in the long term you make

more damage to system. And that's really

where we need to sort of focus. How do

we create resistance, resilience, and

long-term thinking?

>> In that vein, then, where do you How do

you assess the global economy right now?

Because so much emphasis has been put on

the oil shock and the war, also perhaps

overinvestment in AI. Would you say it's

a fragile wall of worry, or is there

confidence that we can get through this

and this this next wave of growth will

be fed by AI, despite the astronomical

numbers that have been poured at data

centers and infrastructure?

>> I think we should need to look at this

in a sort of household economy. You

would never put all your money into a

single household. You'll never do

betting just one thing.

>> Or seven key companies in the United

States.

>> Or seven key companies in the United

States. But but the

the point I'm trying to make is that if

you really want to create a resilient

futures we deserve, then we need to be

able to to hedge our bets. And we will

not be able to do that if we just focus

onto one or two solutions. AI is

important, it will have an impact on

society, absolutely clearly, but it's

not the only thing happening. You know,

we need to also look at the fact that we

are 8 and 1/2 billion on the planet. We

also have to look at natural

world collapsing, with loss of

biodiversity, climate change, plastic

pollution, persistent organic pollution.

I mean, you you can look at it in many

different shapes. If we are destroying

the house in which we live, we're not

going to be able to thrive in the

future.

>> That was Andre Hoffman, co-chair of the

World Economic Forum, speaking with

Bloomberg's Stephen Engle from the

sidelines of the WEF Annual Meeting of

the New Champions, bringing you their

conversation here on the Daybreak Asia

podcast.

Thanks for listening [music] to today's

episode of the Bloomberg Daybreak Asia

edition podcast. Each weekday we look at

the stories shaping markets, [music]

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 [music] Australia. I'm

Doug Krizner, and this is Bloomberg.

>> [music]