April 15, 2024 • 16 mins
Your morning briefing, the business news you need in just 15 minutes.On today's podcast:
(1) The huge salvo of missiles and drones launched from the arid plains of Iran toward Israel was the kind of direct conflict between the Middle East powers that the world had long feared would mark the explosion of a full-blown regional war.
(2) Iran’s weekend attack on Israel with more than 300 missiles and drones marks a perilous turn for a fragile region. It was an unprecedented action, the first strike on the Jewish state from Iranian soil. Iran declared it a massive success.
(3) Oil shrugged off Iran’s unprecedented attack on Israel, with prices easing on speculation that the conflict would remain contained. But markets are showing higher volatility as global traders turn to the dollar and gold.(4) Apple’s iPhone shipments slid a bigger-than-projected 10% in the March quarter, reflecting flagging sales in China despite a broader smartphone industry rebound.
(5) German Chancellor Olaf Scholz will take a delicate message to China this week: Beijing has not acted on European warnings to end discriminatory business practices and failure to do so will result in an escalation in tensions.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Dabat podcast, available every morning on Apple, Spotify or wherever
you listen. It's Monday, the fifteenth of April in London.
I'm Caroline Hepka and.
Speaker 2 (00:18):
I'm Stephen Carroll. Coming up today, Israel grapples with how
to respond to Iran after the weekend's unprecedented miss island
drone attack as world leaders urge restraint.
Speaker 1 (00:28):
Oil prices hold steady on speculation that the conflict can
be contained, but gold continues to rise.
Speaker 2 (00:35):
And in other news, Apple's iPhone shipments drop by ten
percent as sales of android rivals rise.
Speaker 1 (00:42):
Let's start with a round up of our top stories.
A global diplomatic effort is underway to try to avoid
a full blown regional war in the Middle East. Iran
fired more than three hundred drones and missiles against Israel
on Saturday evening. Almost all were intercepted before they reached
it airspace, and there were no fatalities reported Israel As
(01:04):
President it' zach Herzog says his country is still considering
its response, but there will be one.
Speaker 3 (01:11):
This is a declaration of that because we are restrained
and because we know the repercussions, and because we have
deliberations with our partners, we are considering all options. We
are not war.
Speaker 1 (01:24):
Secret Herzog's comments came as Tehran sought to draw a
line under the attack, which it says was retaliation for
the strike on its diplomatic compound in Damascus earlier this month.
It said that there would be no furthest attacks as
long as Israel didn't respond aggressively. At an emergency meeting
of the United Nations Security Council, UN Secretary General Antonio
(01:47):
Guteris called on all sides to de escalate tensions.
Speaker 4 (01:52):
Middle East is on the brink. The people of the
region are confronting a real danger of a devastating, full
scale Now is the time to defuse and the escalate.
Now is the time for maximum restraints.
Speaker 1 (02:08):
Guterres's call was echoed by G seven leaders in a statement.
They condemned what they described as Iram's direct and unprecedented
attack against Israel and said that they will now work
to stabilize the situation and avoid further escalation.
Speaker 2 (02:23):
The United States has ruled out involvement in any retaliation
against Iran for the miss Island drone attack. However, there
is now growing political momentum in Washington to provide Israel
with significant additional military aid. Speaking to Fox News, Republican
House Speaker Mike Johnson said he expects there will be
a vote this week.
Speaker 5 (02:41):
The House Republicans and the Republican Party understand the necessity
of standing with Israel. We're going to try again this week,
and the details of that package are being put together
right now. We're looking at the options and all these
supplemental issues.
Speaker 2 (02:53):
In that interview with Fox News, Johnson also indicated that
funds for Ukraine could be part of the package. Earlier
this year, the setup pasay ninety five billion dollar package
that included support for both Israel and Ukraine.
Speaker 1 (03:05):
The reaction on oil markets to the weekends events has
so far been muted, with many analysts seeing the conflict
as remaining contained for now, but an escalation could push
prices past one hundred dollars a bowl. Aaron David Miller,
who is a senior fellow at the Carnegie Endowment for
International Peace, sums up the consensus view, We're going.
Speaker 6 (03:26):
To get through this without what I would describe to
as a major regional war. Something the Middle East has
never seen before, something that would create spiking oil prices,
plunging financial markets, and a degree of instability across the region.
Speaker 1 (03:42):
Miller also highlights the risks of a wider conflict as
the Middle East produces about a third of the world's
crude oil. Brentfrude is already up almost twenty percent this
year as OPEC plus has tightened supply. There are also
fears of disruption to the key shipping route through the
Red Sea after Iran sees the container vessel traveling through
the Strait of Hormuz on Saturday.
Speaker 2 (04:03):
To other news, the iPhone is falling behind its Android
rivals in the race for the global smartphone market. That's
despite the sexual recording some of its best growth in years.
Bloomberoks teaa at a Bio has the details.
Speaker 7 (04:16):
The worldwide mobile market is rebounding, enjoying its best growth
in years. That will be little consolation to Apple, though,
after it saw iPhone shipments for by ten percent in
the first three months of the year. It's a drop
that puts the company behind analyst expectations by more than
a million units. Muted sales in China after a ban
(04:37):
on foreign devices could be behind the decline, which saw
Apple outpaced by rival Samsung. As home to the company's
biggest retail network outside the US, Apple will need to
do more to recapture its Chinese fans. In London, tiwa
at a Bio Bloomberg.
Speaker 1 (04:54):
Radio, Aluminium and Nicolas spiking on the London Metal Exchange
after sanctions against the US and UK imposed a ban
on deliveries of any Russian supplies after midnight last Friday
in a bid to inhibit the funding for Vladimir Putin's
war in Ukraine. Aluminium jumped as much as nine point
four percent and Nicol was not far behind, suggesting that
(05:15):
traders are bracing for major disruption. Russian metal accounted for
ninety one percent of LME stockpiles at the end of March.
The escalation of hostilities in the Middle East could also
stoke volatility across the sector.
Speaker 2 (05:30):
Germany, as Olave Schultz has arrived in China with a
difficult message act soon or face EU tariffs. Europe's increasingly
wary of China's use of massive public support and critical sectors,
and has been toughening its stance in recent months. A
chief in the North Asia correspondent Stephen Engel explains how
that puts Germany in a tough position. As China's largest
(05:50):
global trading partner.
Speaker 8 (05:52):
He has to listen to the concerns of the German businesses,
two out of three in a German Chamber of Commerce
of China a survey saying, look, they're facing unfair competition
in the China market. So there are these concerns. And
this is at a time as well where other EU
leaders are discussing and really threatening the potential for tariffs
(06:12):
on evs and the like. So he's going to have
to really walk a very tricky balancing act.
Speaker 2 (06:20):
Angel notes that a few weeks after Schultz's visit, France's
Emmanuel Macron is also set to travel to Beijing.
Speaker 1 (06:26):
And those are our top stories. In terms of the
markets this morning, stock futures for Europe are actually higher,
up four tenths of one percent through a stocks fifty futures.
The MSCI Asia Pacific Index is down by eight tenths
of one percent, and tenure US treasury yield this morning
trading a four point five six percent, up by full
basis points.
Speaker 2 (06:46):
There's coverage across Bloomberg this morning of the continued reaction
to the weekend's attack on Israel. There is a live
blog tliv is the function on the terminal. It's also
on the Bloomberg website as well, looking at all of
the various aspects of this already. Just one piece I've
noted out from one of our reporters in Iran, Arsan Shallow,
reporting this morning that Iran has lifted a suspension on
(07:07):
domestic and international flights from its capital. Early this morning.
It had imposed restrictions on flights in the airspace over
the weekend due to fears of the Israel and Israeli
reprisal for the missile drone barrage. Of course, there has
been a significant disruption two flight paths since the weekend
events as well.
Speaker 1 (07:24):
Yeah. Absolutely, Look, this is the first direct attack by
Iran against Israel ever, and so we should dive into
what the Israeli response to the attack over the weekend
from Tehran might be. The UN Security Council met on
Sunday in New York, where the US said that it
would explore ways to hold Iran accountable for its actions
(07:46):
at the UN. Bloomberg's Israel Bureau chief Ethan Baruna joins
US now from Tel Aviv. Good morning, Ethan. Israel's defenses
held up against the barrage on Saturday night by Iran.
How are we expecting Israel to respond to this?
Speaker 9 (08:04):
Well, it's, as you can imagine, still under a very
intense debate. There was a three hour war cabinet meeting
last night that ended inconclusively as far as we can tell.
I think that probably we will not see and the
Iran seems to understand that by having opened its airspace,
we will not see an immediate major response. And Israel,
(08:26):
by the way, announced that it's opening its schools this
morning after having closed them yesterday out of fear. So
it's clear that the American desire for the Israelis not
to jump is being listened to. I think the Israelis
have felt the warm embrace of the United States again
after many weeks of cold relations, and that's in playing
(08:48):
a role. And I think also that they like the
idea of able to choose what to do next rather
than jumping.
Speaker 2 (08:56):
You mentioned some with the international pressure there on his
But how much domestic pressure is there on Prime Minister
in Nesena, who too act to respond.
Speaker 9 (09:07):
I think it's pretty limited. That kind of pressure is
coming from the far right, which is not negligible in
this country, but it is not the majority. I think
that the fact that there was not any death here.
There was a seven year old girl who's fighting for
her life who was hit by shrapnel, but other than that,
no casualties and no genuine damage to its military facilities
(09:32):
that were attacked. That has given Israel as sense of
accomplishment and relief and not a need for instantly responding.
And then those other factors were playing a role, which
is there's some fatigue and there's some desire to not
alienate the United States, and I think the general idea
that you know, you pick your response, you don't jump
(09:54):
makes sense. And also trying to figure out what exactly
this means. The fact that Iran has chosen the first
time in the forty plus year history of the Shadow
War to act openly, I think is requiring people to
analyze what this means.
Speaker 1 (10:11):
There is though, concern that even if it is slow,
that for tat the escalations are building potentially into a
regional conflict. How much influence do you think the United
States has to prevent further escalation and the fear of
an out and out war in the Middle East.
Speaker 9 (10:32):
Well some, but I mean those fears are legitimate and real.
There's be ridiculous to say that they are not important.
And you know, many conflagrations occur because of people sort
of backing into them rather than going and willingly, so
I think it's a very legitimate concern. You know, one
of the things about Saturday night is that one hundred
(10:53):
and twenty ballistic missiles came flying at Israel and they
were able to stop them. But imagine if one had
gotten through and killed people. We'd be having a very
different conversation. So it's not there's no question that this
is a very very volatile situation.
Speaker 2 (11:09):
What does all of this mean Ethan for the war
in Gaza Israe, As you mentioned, it had been attracting
increased criticism for its conduct there before the events of
this weekend.
Speaker 9 (11:19):
I think that's a great question, and it's something we
need to be watching very closely in the coming days.
My instinct, without yet enough evidence, is that the hardliners
here who are demanding gratification to go after Iran, they
will be answered by being told that, well, Israel is
(11:40):
not going to do that, but it's going to redouble
his efforts in Gaza. Now, of course, by doing that,
and there's this question of going into Rafa, they could
alienate the United States again. But I'm guessing that they'll
be able to cut a deal with the US. But
we shall see. I think that is the big question.
Two reserve divisions have been called up in the last
twenty four hours. One has to assume it's related to Gaza.
(12:03):
But I think these decisions are just being made now,
and I think that we should keep our eyes on Gaza.
Speaker 8 (12:10):
You're quite right.
Speaker 1 (12:11):
Also, the border with Lebanon hasbaline in Lebanon. I mean
the attack by Iran was not followed out by other
proxies in other on other borders into Israel. What do
we know about the risk of escalation there and the
situation with these other Iran backed groups.
Speaker 9 (12:30):
Well, I mean there were right, so there were missiles
that came into Israel on Saturday night from other parts
of the Middle East, from Syria and Iraq and from Yemen.
These are all malicias that are proxies of Iran. But
you're right then, in terms of his beloved there was
a summer strength there. But on the other hand, of course,
that's the other big issue for Israel is that it
(12:51):
has seventy or eighty thousand people who can't live in
their homes in the north because of this sort of
middle level war going on between Israel and his Bolah
and I and you know again, it's sort of we
need to go back to Gaza because Hisbola claims that
it's going to do what it has to do only
after there is it will negotiate only after there is
(13:13):
a piece deal in Gaza, which does not seem imminent.
So all of these pieces of a puzzle are related.
And you and indeed Hisbola and Northern Israel southern Lebanon
are another very volatile battleground.
Speaker 2 (13:27):
Definitely, Okay, Ethan bron Our Israel bi Riti, thank you
very much for joining us this morning. And of course
there's plenty to read on Bloomberg dot com and on
the terminal from Ethan and our colleagues in Israel, including
that race to avert a full blown war. Today is
a big take report from Bloomberg.
Speaker 1 (13:43):
Now turning our attention to what the implications of this
perilous situation might be for macroeconomics, for oil prices in
particular and inflation around the world. Many analysts are trying
to understand this. Joining us now is our senior energy
report to Stephen Stepchinski. Good morning, Stephen. All has been
one of the strongest performers in copulities this year. The
(14:06):
reaction though more muted now to Iran's attack. But what
are the concerns for oil markets?
Speaker 10 (14:13):
I mean, I think the real concern. You know, you've
heard how how everyone is kind of trying to get
Israel to to have a restraint approach or response to
the attack over the weekend. I think it's really the
response from Israel's government to Iran will determine whether, you know,
this leads to a wider conflict. And that's what the
(14:36):
oil market is looking at right now. They're really looking
and closely watching risks of escalation, and right now oil
prices are are pretty steady. They're quite a muted response
for historic strike on Israel because they're they're the market
is essentially pricing that there won't be any larger escalation now. Nothing,
(14:59):
of course, is sentenced, and it's very hard to predict
what can happen from here, but analysts are essentially saying
that the oil market is breathing a sigh of relief,
especially on Friday. I think a lot of traders were
exiting their short positions. They weren't sure what was going
to happen, and the worst case scenario did not play out.
But of course risk still exists in the Middle East
(15:20):
and the conflict is ongoing. So now it's sort of
the balls in Israel's court to see how the oil
market will react.
Speaker 2 (15:27):
What does this mean in terms of supply, Stephen, So.
Speaker 10 (15:31):
So far supply is unaffected. Iranian crew production has had
a tumultuous decade. Of course it's already been hit by
US sanctions, but their production has risen more than twenty
percent over the last two years. They produce about three
point four million barrels a day, which makes up about
three point three percent of global supply, which is not nothing,
(15:56):
and a lot of the oil still because despite the sanctions,
make its way into the market to China and other places.
So the Iranian oil is still flowing. But if there
is a larger conflict, then perhaps out at risk.
Speaker 2 (16:12):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 1 (16:18):
Look for us on your podcast feed every morning on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (16:24):
You can also listen live each morning on London DAB Radio,
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Speaker 1 (16:30):
Our flagship New York station, is also available on your
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Speaker 2 (16:37):
I'm Caroline Hepka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg Daybreak Europe
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Dabat podcast, available every morning on Apple, Spotify or wherever
you listen. It's Monday, the fifteenth of April in London.
I'm Caroline Hepka and.
Speaker 2 (00:18):
I'm Stephen Carroll. Coming up today, Israel grapples with how
to respond to Iran after the weekend's unprecedented miss island
drone attack as world leaders urge restraint.
Speaker 1 (00:28):
Oil prices hold steady on speculation that the conflict can
be contained, but gold continues to rise.
Speaker 2 (00:35):
And in other news, Apple's iPhone shipments drop by ten
percent as sales of android rivals rise.
Speaker 1 (00:42):
Let's start with a round up of our top stories.
A global diplomatic effort is underway to try to avoid
a full blown regional war in the Middle East. Iran
fired more than three hundred drones and missiles against Israel
on Saturday evening. Almost all were intercepted before they reached
it airspace, and there were no fatalities reported Israel As
(01:04):
President it' zach Herzog says his country is still considering
its response, but there will be one.
Speaker 3 (01:11):
This is a declaration of that because we are restrained
and because we know the repercussions, and because we have
deliberations with our partners, we are considering all options. We
are not war.
Speaker 1 (01:24):
Secret Herzog's comments came as Tehran sought to draw a
line under the attack, which it says was retaliation for
the strike on its diplomatic compound in Damascus earlier this month.
It said that there would be no furthest attacks as
long as Israel didn't respond aggressively. At an emergency meeting
of the United Nations Security Council, UN Secretary General Antonio
(01:47):
Guteris called on all sides to de escalate tensions.
Speaker 4 (01:52):
Middle East is on the brink. The people of the
region are confronting a real danger of a devastating, full
scale Now is the time to defuse and the escalate.
Now is the time for maximum restraints.
Speaker 1 (02:08):
Guterres's call was echoed by G seven leaders in a statement.
They condemned what they described as Iram's direct and unprecedented
attack against Israel and said that they will now work
to stabilize the situation and avoid further escalation.
Speaker 2 (02:23):
The United States has ruled out involvement in any retaliation
against Iran for the miss Island drone attack. However, there
is now growing political momentum in Washington to provide Israel
with significant additional military aid. Speaking to Fox News, Republican
House Speaker Mike Johnson said he expects there will be
a vote this week.
Speaker 5 (02:41):
The House Republicans and the Republican Party understand the necessity
of standing with Israel. We're going to try again this week,
and the details of that package are being put together
right now. We're looking at the options and all these
supplemental issues.
Speaker 2 (02:53):
In that interview with Fox News, Johnson also indicated that
funds for Ukraine could be part of the package. Earlier
this year, the setup pasay ninety five billion dollar package
that included support for both Israel and Ukraine.
Speaker 1 (03:05):
The reaction on oil markets to the weekends events has
so far been muted, with many analysts seeing the conflict
as remaining contained for now, but an escalation could push
prices past one hundred dollars a bowl. Aaron David Miller,
who is a senior fellow at the Carnegie Endowment for
International Peace, sums up the consensus view, We're going.
Speaker 6 (03:26):
To get through this without what I would describe to
as a major regional war. Something the Middle East has
never seen before, something that would create spiking oil prices,
plunging financial markets, and a degree of instability across the region.
Speaker 1 (03:42):
Miller also highlights the risks of a wider conflict as
the Middle East produces about a third of the world's
crude oil. Brentfrude is already up almost twenty percent this
year as OPEC plus has tightened supply. There are also
fears of disruption to the key shipping route through the
Red Sea after Iran sees the container vessel traveling through
the Strait of Hormuz on Saturday.
Speaker 2 (04:03):
To other news, the iPhone is falling behind its Android
rivals in the race for the global smartphone market. That's
despite the sexual recording some of its best growth in years.
Bloomberoks teaa at a Bio has the details.
Speaker 7 (04:16):
The worldwide mobile market is rebounding, enjoying its best growth
in years. That will be little consolation to Apple, though,
after it saw iPhone shipments for by ten percent in
the first three months of the year. It's a drop
that puts the company behind analyst expectations by more than
a million units. Muted sales in China after a ban
(04:37):
on foreign devices could be behind the decline, which saw
Apple outpaced by rival Samsung. As home to the company's
biggest retail network outside the US, Apple will need to
do more to recapture its Chinese fans. In London, tiwa
at a Bio Bloomberg.
Speaker 1 (04:54):
Radio, Aluminium and Nicolas spiking on the London Metal Exchange
after sanctions against the US and UK imposed a ban
on deliveries of any Russian supplies after midnight last Friday
in a bid to inhibit the funding for Vladimir Putin's
war in Ukraine. Aluminium jumped as much as nine point
four percent and Nicol was not far behind, suggesting that
(05:15):
traders are bracing for major disruption. Russian metal accounted for
ninety one percent of LME stockpiles at the end of March.
The escalation of hostilities in the Middle East could also
stoke volatility across the sector.
Speaker 2 (05:30):
Germany, as Olave Schultz has arrived in China with a
difficult message act soon or face EU tariffs. Europe's increasingly
wary of China's use of massive public support and critical sectors,
and has been toughening its stance in recent months. A
chief in the North Asia correspondent Stephen Engel explains how
that puts Germany in a tough position. As China's largest
(05:50):
global trading partner.
Speaker 8 (05:52):
He has to listen to the concerns of the German businesses,
two out of three in a German Chamber of Commerce
of China a survey saying, look, they're facing unfair competition
in the China market. So there are these concerns. And
this is at a time as well where other EU
leaders are discussing and really threatening the potential for tariffs
(06:12):
on evs and the like. So he's going to have
to really walk a very tricky balancing act.
Speaker 2 (06:20):
Angel notes that a few weeks after Schultz's visit, France's
Emmanuel Macron is also set to travel to Beijing.
Speaker 1 (06:26):
And those are our top stories. In terms of the
markets this morning, stock futures for Europe are actually higher,
up four tenths of one percent through a stocks fifty futures.
The MSCI Asia Pacific Index is down by eight tenths
of one percent, and tenure US treasury yield this morning
trading a four point five six percent, up by full
basis points.
Speaker 2 (06:46):
There's coverage across Bloomberg this morning of the continued reaction
to the weekend's attack on Israel. There is a live
blog tliv is the function on the terminal. It's also
on the Bloomberg website as well, looking at all of
the various aspects of this already. Just one piece I've
noted out from one of our reporters in Iran, Arsan Shallow,
reporting this morning that Iran has lifted a suspension on
(07:07):
domestic and international flights from its capital. Early this morning.
It had imposed restrictions on flights in the airspace over
the weekend due to fears of the Israel and Israeli
reprisal for the missile drone barrage. Of course, there has
been a significant disruption two flight paths since the weekend
events as well.
Speaker 1 (07:24):
Yeah. Absolutely, Look, this is the first direct attack by
Iran against Israel ever, and so we should dive into
what the Israeli response to the attack over the weekend
from Tehran might be. The UN Security Council met on
Sunday in New York, where the US said that it
would explore ways to hold Iran accountable for its actions
(07:46):
at the UN. Bloomberg's Israel Bureau chief Ethan Baruna joins
US now from Tel Aviv. Good morning, Ethan. Israel's defenses
held up against the barrage on Saturday night by Iran.
How are we expecting Israel to respond to this?
Speaker 9 (08:04):
Well, it's, as you can imagine, still under a very
intense debate. There was a three hour war cabinet meeting
last night that ended inconclusively as far as we can tell.
I think that probably we will not see and the
Iran seems to understand that by having opened its airspace,
we will not see an immediate major response. And Israel,
(08:26):
by the way, announced that it's opening its schools this
morning after having closed them yesterday out of fear. So
it's clear that the American desire for the Israelis not
to jump is being listened to. I think the Israelis
have felt the warm embrace of the United States again
after many weeks of cold relations, and that's in playing
(08:48):
a role. And I think also that they like the
idea of able to choose what to do next rather
than jumping.
Speaker 2 (08:56):
You mentioned some with the international pressure there on his
But how much domestic pressure is there on Prime Minister
in Nesena, who too act to respond.
Speaker 9 (09:07):
I think it's pretty limited. That kind of pressure is
coming from the far right, which is not negligible in
this country, but it is not the majority. I think
that the fact that there was not any death here.
There was a seven year old girl who's fighting for
her life who was hit by shrapnel, but other than that,
no casualties and no genuine damage to its military facilities
(09:32):
that were attacked. That has given Israel as sense of
accomplishment and relief and not a need for instantly responding.
And then those other factors were playing a role, which
is there's some fatigue and there's some desire to not
alienate the United States, and I think the general idea
that you know, you pick your response, you don't jump
(09:54):
makes sense. And also trying to figure out what exactly
this means. The fact that Iran has chosen the first
time in the forty plus year history of the Shadow
War to act openly, I think is requiring people to
analyze what this means.
Speaker 1 (10:11):
There is though, concern that even if it is slow,
that for tat the escalations are building potentially into a
regional conflict. How much influence do you think the United
States has to prevent further escalation and the fear of
an out and out war in the Middle East.
Speaker 9 (10:32):
Well some, but I mean those fears are legitimate and real.
There's be ridiculous to say that they are not important.
And you know, many conflagrations occur because of people sort
of backing into them rather than going and willingly, so
I think it's a very legitimate concern. You know, one
of the things about Saturday night is that one hundred
(10:53):
and twenty ballistic missiles came flying at Israel and they
were able to stop them. But imagine if one had
gotten through and killed people. We'd be having a very
different conversation. So it's not there's no question that this
is a very very volatile situation.
Speaker 2 (11:09):
What does all of this mean Ethan for the war
in Gaza Israe, As you mentioned, it had been attracting
increased criticism for its conduct there before the events of
this weekend.
Speaker 9 (11:19):
I think that's a great question, and it's something we
need to be watching very closely in the coming days.
My instinct, without yet enough evidence, is that the hardliners
here who are demanding gratification to go after Iran, they
will be answered by being told that, well, Israel is
(11:40):
not going to do that, but it's going to redouble
his efforts in Gaza. Now, of course, by doing that,
and there's this question of going into Rafa, they could
alienate the United States again. But I'm guessing that they'll
be able to cut a deal with the US. But
we shall see. I think that is the big question.
Two reserve divisions have been called up in the last
twenty four hours. One has to assume it's related to Gaza.
(12:03):
But I think these decisions are just being made now,
and I think that we should keep our eyes on Gaza.
Speaker 8 (12:10):
You're quite right.
Speaker 1 (12:11):
Also, the border with Lebanon hasbaline in Lebanon. I mean
the attack by Iran was not followed out by other
proxies in other on other borders into Israel. What do
we know about the risk of escalation there and the
situation with these other Iran backed groups.
Speaker 9 (12:30):
Well, I mean there were right, so there were missiles
that came into Israel on Saturday night from other parts
of the Middle East, from Syria and Iraq and from Yemen.
These are all malicias that are proxies of Iran. But
you're right then, in terms of his beloved there was
a summer strength there. But on the other hand, of course,
that's the other big issue for Israel is that it
(12:51):
has seventy or eighty thousand people who can't live in
their homes in the north because of this sort of
middle level war going on between Israel and his Bolah
and I and you know again, it's sort of we
need to go back to Gaza because Hisbola claims that
it's going to do what it has to do only
after there is it will negotiate only after there is
(13:13):
a piece deal in Gaza, which does not seem imminent.
So all of these pieces of a puzzle are related.
And you and indeed Hisbola and Northern Israel southern Lebanon
are another very volatile battleground.
Speaker 2 (13:27):
Definitely, Okay, Ethan bron Our Israel bi Riti, thank you
very much for joining us this morning. And of course
there's plenty to read on Bloomberg dot com and on
the terminal from Ethan and our colleagues in Israel, including
that race to avert a full blown war. Today is
a big take report from Bloomberg.
Speaker 1 (13:43):
Now turning our attention to what the implications of this
perilous situation might be for macroeconomics, for oil prices in
particular and inflation around the world. Many analysts are trying
to understand this. Joining us now is our senior energy
report to Stephen Stepchinski. Good morning, Stephen. All has been
one of the strongest performers in copulities this year. The
(14:06):
reaction though more muted now to Iran's attack. But what
are the concerns for oil markets?
Speaker 10 (14:13):
I mean, I think the real concern. You know, you've
heard how how everyone is kind of trying to get
Israel to to have a restraint approach or response to
the attack over the weekend. I think it's really the
response from Israel's government to Iran will determine whether, you know,
this leads to a wider conflict. And that's what the
(14:36):
oil market is looking at right now. They're really looking
and closely watching risks of escalation, and right now oil
prices are are pretty steady. They're quite a muted response
for historic strike on Israel because they're they're the market
is essentially pricing that there won't be any larger escalation now. Nothing,
(14:59):
of course, is sentenced, and it's very hard to predict
what can happen from here, but analysts are essentially saying
that the oil market is breathing a sigh of relief,
especially on Friday. I think a lot of traders were
exiting their short positions. They weren't sure what was going
to happen, and the worst case scenario did not play out.
But of course risk still exists in the Middle East
(15:20):
and the conflict is ongoing. So now it's sort of
the balls in Israel's court to see how the oil
market will react.
Speaker 2 (15:27):
What does this mean in terms of supply, Stephen, So.
Speaker 10 (15:31):
So far supply is unaffected. Iranian crew production has had
a tumultuous decade. Of course it's already been hit by
US sanctions, but their production has risen more than twenty
percent over the last two years. They produce about three
point four million barrels a day, which makes up about
three point three percent of global supply, which is not nothing,
(15:56):
and a lot of the oil still because despite the sanctions,
make its way into the market to China and other places.
So the Iranian oil is still flowing. But if there
is a larger conflict, then perhaps out at risk.
Speaker 2 (16:12):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 1 (16:18):
Look for us on your podcast feed every morning on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (16:24):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 1 (16:30):
Our flagship New York station, is also available on your
Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.
Speaker 2 (16:37):
I'm Caroline Hepka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg Daybreak Europe
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