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Hi, this is Emily Thomas from the Global News Podcast.
Today, the latest on the continued attacks in the Middle East, the impact on people in the region and global financial markets, plus exploding parcels, an investigation into a sabotage attack coordinated by Russian military intelligence and worries that AI robots reflect an overwhelmingly male perspective.
Search for the Global News Podcast wherever you get your BBC podcasts.
This is not the future we were promised.
Like how about that for a tagline for the show?
From the BBC.
This is The Interface, the show that explores how tech is rewiring your week and your world.
This isn't about quarterly earnings or about tech reviews.
It's about what technology is actually doing to your work and your politics, your everyday life.
And all the bizarre ways people are using the internet.
Listen on BBC.com or wherever you get your podcasts.
Oil prices continue to swing.
What options are there to steady the prices?
You draw down these sanctioned barrels.
That buffer is the first to go.
And then there are non-sanctioned barrels.
And then you have the strategic reserves, which should be held as your sort of last resort.
Welcome to World Business Report from the BBC World Service.
I'm Sam Fenwick.
It's been another busy day for oil markets.
Prices started the day at $90 a barrel.
It climbed to $94 before falling to around $81 amid mixed signals from Washington.
And the International Energy Agency has been meeting to consider whether releasing emergency reserves could help stabilize the market.
So a series of events today, Tuesday, has led to big swings in the oil price.
There's been confusion over whether the US Navy had escorted a tanker through the Strait of Hormuz, a claim initially made by the US Energy Secretary, before the White House said that it didn't happen.
At the same time, the conflict itself appears to be intensifying, with reports of heavy strikes inside Iran and attacks on energy infrastructure in the region.
All of that has been feeding directly into the oil market.
So how are traders reading the developments?
George Conboy is with us throughout the show today.
He's chairman of Brighton Securities at Rochester, New York.
Let's get started and clear up what happened earlier today.
The cost of a barrel of Brent crude dropped sharply after the US Energy Secretary posted on X that the US had successfully escorted this oil tanker through the strait.
However, the post was then removed and the White House said in a press conference that it wasn't escorted.
What do you make of all of that?
What I make is why I'm still in this business.
Every day there's something I've never seen before.
A deleted tweet from a federal official.
It dropped the prices because traders saw that as a very positive sign.
When that positive was removed, prices popped back up.
But a real crazy event.
Iran's foreign minister accused the US of posting fake news to manipulate markets.
And Donald Trump has taken to his social media platform Truth Social after that, saying that any minds that are in the straight, basically warning Iran over those.
So you know, there is a war going on with drones and weapons, but there's also a war of words, isn't there?
Absolutely.
It might be the first time I've ever seen an Iranian official post something demonstrably true.
But it's quite a war of words as well as bullets.
How are you expecting the market to kind of react going forward?
Are they kind of reacting to what is immediately happening or are they trying to price in what they think might happen?
It's always both, Sam.
There's the short-term money you try to make by trading the swings and there's slightly longer-term money by what you think is going to happen tomorrow or next week.
But in the oil markets, as long as I'm in business, the most predictable thing is unpredictability.
You say that and then you talk to businesses who say that they're very concerned about the uncertainty and the unpredictability, yet they're all operating in this sector.
Sure.
Well, they have to.
The fact is that if you're in that oil business or you're a consumer of oil, you need that product.
You know there's going to be volatility.
And all you can do is the best you can do, knowing that all your competitors are facing the same variable.
And that's going to end up pricing itself into the product or service.
Okay George, stay with us because we're going to move on, because all the volatility in the oil prices prompted the International Energy Agency, which advises major economies on energy security, to hold emergency talks in Paris on Tuesday afternoon.
The agency is concerned that difficulties moving oil through the Strait of Hormuz, along with disruptions to production, could pose growing risks to global markets.
One option discussed at the meeting was whether countries might release emergency oil stockpiles to help stabilise supplies.
Neil Atkinson is the former head of oil industry and markets at the IEA and he's been involved in meetings like this.
And I asked him how the IEA operates and what it would take to release some of its oil reserves.
To be a member of the IEA, you are obliged to hold stocks equivalent to 90 days of net imports.
So how much oil are we talking about then?
The IEA collectively today has got roughly in the region of 12 billion barrels of of crude oil, which is government-held strategic stocks.
In addition to that, there's another 600 million barrels which is held by companies in the IEA countries, which are compulsory stocks held by companies under IEA mandate.
So where is the oil stored?
Is it in kind of underground caverns or tanks or something else?
Well, both.
I mean.
The United States, for example, has a network of underground caverns, a lot of them located in the Gulf Coast region in Louisiana, dotted around the country.
Other countries have similar underground facilities.
In addition to that, there is tank storage and space that is taken at, for example, oil refineries, where there's significant storage capacity available.
And the process of releasing that oil, does it go straight onto the open market?
Well, in theory, yes.
What happens is that the countries collectively agree that they will release or they will offer to the market a given number of barrels over a certain period of time.
And then the issue is how much the people who take the oil have to pay for it.
So this meeting that has been held this afternoon, Tuesday afternoon in Paris.
Do we know the outcome of it?
Is it the first meeting of a few?
Have they decided to release some oil?
I think it's at least the third meeting that has happened over the last few days.
Up till now, no decision has been made to authorise a release of oil.
You will have been in similar meetings in the past.
What do you think will be the point at which they decide to release some oil?
How bad does the situation need to get?
Well, you need to separate price from volume because, in theory, the IEA's emergency stock release mechanism comes into action when a percentage of global supply is cut off or affected.
So when will that be?
Well, that's the big question.
What the oil price is at any one time is another matter.
Now at the moment.
We're in a situation now where, because normal traffic through the Strait of Hormuz has not been taking place for about 10 days or so now, give or take countries and companies are starting to run down on their stocks.
So, for example, if you're an oil refiner that buys oil from Saudi Arabia and it comes on a ship, it's not been coming on a ship for the last week or so, so you are running on stocks which are held at your refinery.
So, at the moment, There is no actual shortage to the market.
However, we are very close now, and it's probably only a matter of days to a situation where, unless we get the resumption of traffic through the Strait of Hormuz, we will not be able to continue to have the industry function properly.
And therefore an injection of supply into the market in the form of an IA stock release will be necessary.
And we're pretty close to that now.
Are these circumstances unusual that there is oil out there?
There's lots of oil.
I mean we've heard today from Saudi Aramco's boss saying that they are filling up their supplies very quickly and they're going to have to switch off the production because they've got nowhere else to put the oil, because they can't get it out.
It's the transportation of this oil that's causing the problem.
Well, it's never happened before on this scale before.
What we need to remember is that there has been interruption to supply from the Gulf before.
And of course, outside of the region, we had Russia-Ukraine.
What is unique about this situation is that we have a de facto closure of the Strait of Hormuz, a total closure.
And at the moment, we don't know when it will end.
That has never happened before.
And so is there a danger that if we release from our emergency stores that we might not be able to fill them back up again?
Well, that's a good point.
I have a great deal of sympathy with the IEA because it's a very difficult recommendation to make.
The IEA's job now which is what they are doing, I guess, even as we speak is to communicate with the member governments about how much stock they have on hand in addition to what they're actually obliged to have, because the US has a lot more, for example, than it's obliged to have.
And the IEA will look at all those numbers and think well, on balance, we'd probably recommend that the group collectively draws down its strategic stocks.
So it's a big deal.
If you have no visibility whatsoever as to when normal operations through the Strait of Hormuz will resume.
So the longer the Strait is closed, the more difficult the situation is?
Yes, absolutely.
The key to everything is the resumption of normal operations as soon as possible through the Strait of Hormuz.
Donald Trump has talked about the US Army escorting oil tankers through the Strait.
How important could that be?
Well, you can't escort all of them.
It's just not feasible.
And the cost of underwriting the insurance because insurance rates are shot through the roof is colossal.
So, yes, it's a gesture and it's been well received.
But the reality of it is in no way could you escort the normal level of traffic that flows through the Strait of Hormuz every day.
That was Neil Atkinson, former head of oil markets at the International Energy Agency.
Despite the tensions in the global energy markets, the Trump administration has so far been reluctant to release oil from the United States Strategic Petroleum Reserve.
Officials say strong US production means there's no immediate shortage of supply, although political and logistical factors vary may also be influencing that decision.
So what's behind that approach?
Sarah Emerson can tell us more.
She's the founder and president of ESAI Energy, a consultancy firm based in Boston.
I would suspect from the United States side there is a feeling of this conflict is not going to last that much longer and we'll be able to see tankers moving through the Strait of Hormuz, which eliminates the supply disruption or at least ameliorates the supply disruption.
So I mean, to my mind, at 80 or 90 crude oil and the expectation that the conflict will maybe not last that much longer, I'm not surprised they made the decision to hold off on the drawdown.
You agree with that assessment by the sounds of it?
And I try not to agree or disagree, but just to analyze.
And I think that's probably why it happened.
What's the crunch point then?
How bad does it need to get before any oil might be released from these emergency stores?
Well, you remember the strategic reserves are one of several tools for managing this disruption.
The first tool is you have significant inventories at sea right now.
You have all of the sanctioned crude of Iran and Russia that has not been delivered or unloaded because of sanctions.
That crude, a couple of days ago, we calculated it was about 300 million barrels.
So that has to be delivered.
What the U.S.
Treasury Department did is they said to India you may have a waiver from the sanctions against oil and Roseneft and actually import that crude.
I mean, that's why the oil price is not $120 like it was Sunday night.
It's because there is this additional buffer.
That buffer is the first to go.
And then there are non-sanctioned barrels that are in tankers or in on-land commercial inventories.
They also can provide a little bit of a buffer.
And then you have the strategic reserves, which should be held as your sort of last resort drawdown.
All of that suggests this was premature to do this right now.
The boss of Saudi Aramco has been talking today saying that there are concerns that their storage is actually filling up and once it's full up they might have to switch off production.
How difficult could that be to get started again?
Well, I believe they've already begun shutting in production and so has the UAE and Kuwait and Iraq.
That is already happening and this disruption is very real.
Your question is, if this conflict were to end tomorrow, how long would it take?
And I think this is where you have to make a distinction between spare capacity, which they were holding off the market prior to the conflict, and and actual production that they've been producing up through the beginning of the conflict.
And I think that volume, that latter volume, I think, can come back fairly quickly, maybe within two to four weeks.
The volume that everyone talks about in the press is this spare capacity that was not being produced.
And the definition of that spare capacity is it takes 90 days.
So those are two different sources of supply.
In terms of this conflict, have you ever seen anything like it before?
We've seen this oil price jump around from $110, $90, $89 a barrel, kind of bouncing around.
Is this sort of conflict, is this war sort of worrying you about the global state of oil production?
No, we've had oil crises before.
We had them in 73, 1979, 1991, 2003.
I mean there's.
There've been several times where we've had oil supply crises, you could argue.
The pandemic which started out as a demand crisis became, you know, we also saw a significant reduction in supply.
I mean, this is the nature of the beast.
If you're going to depend on oil, you're depending on a significant volume coming from the Arab Gulf region, which means you're depending on maintaining that 30 miles straight so that oil can flow through it.
So I think for those of us who have been in this industry for a long time, this is not a shock.
It's just here we go again.
Sarah Emerson there, president of EAIA Energy, and she is in Boston.
George Conboy is listening to that.
George.
We've only really seen the US releasing its strategic oil reserve a few times during the 1991 election.
Gulf War, Hurricane Katrina in 2005 as part of an international effort to offset supply disruptions from Libya in 2011 and then, most recently, under Joe Biden in 2022, and the war in Ukraine.
Do you think we'll see the release of oil in the short term, in the long term, or not at all?
No, I think probably not.
At least that's what markets seem to be betting now.
Markets seem to agree with Sarah Emerson that the war, or at least the disruption in petroleum supply, will be relatively brief.
Watch the price as your barometer of whether traders continue to think that.
But for now, that's what they're thinking.
Sarah was talking about how there is oil out there.
It's just we can't get to it because of the issues with the straight.
Could that then, if we know that there's oil out there, will that kind of alleviate the price, do you think?
Is that why we've not seen it shoot up quite so high?
Sure, because the figurative pipeline ships in the Strait of Hormuz or wherever it might be that figurative pipeline is interrupted, but it's not shut.
If events change, you'll see the prices change.
But for now it wouldn't take too long to get that sequestered oil, whether it's with the Saudis or wherever else.
Wouldn't take that long to get it into that figurative pipeline.
Okay, George, stay with us.
We will come and talk to you again in a moment.
Hi, this is Emily Thomas from the Global News Podcast.
Today, the latest on the continued attacks in the Middle East, the impact on people in the region and global financial markets, plus exploding parcels, an investigation into a sabotage attack coordinated by Russian military intelligence and worries that AI robots reflect an overwhelmingly male perspective.
Search for the Global News Podcast wherever you get your BBC podcasts.
This is not the future we were promised.
Like how about that for a tagline for the show?
From the BBC.
This is The Interface, the show that explores how tech is rewiring your week and your world.
This isn't about quarterly earnings or about tech reviews.
It's about what technology is actually doing to your work and your politics, your everyday life.
And all the bizarre ways people are using the internet.
Listen on BBC.com or wherever you get your podcasts.
You're listening to World Business Report from the BBC World Service with me, Sam Fenwick.
Well staying with the war in the Middle East, and the boss of the global shipping giant Maersk, has been telling the BBC that the war is having a profound impact on trade and warned that disruption could worsen if the Strait of Hormuz remains closed.
Maersk, the world's second largest container shipping company, has suspended bookings to and from Gulf states, as well as Iraq and Jordan.
Ships are also being diverted away from the Suez Canal, instead travelling around the Cape of Good Hope.
The company's chief executive, Vincent Clerk, has been speaking to the BBC's Jonathan Josephs.
With the experience that we have had in the Red Sea with the attack by drones from the Houthis towards international transits there, I think we have learned an important lesson, which is that you don't need very sophisticated naval capabilities.
You need to have sufficient drones that you can try to overwhelm the defense that those ships can have from the escorts that they might have.
And so for us, the main concern is the safety of our crews, is the safety of our assets.
And as long as there are significant drone capabilities, no assurance of a truce, then it's very hard for us to put our colleagues and our ship in harm's way and risk having an attack be successful and create damage or loss of life in the process.
Another option that's being discussed by Presidents Trump and President Macron is the idea that there could be some kind of Navy escort to get ships through the Strait of Hormuz and perhaps even the Red Sea.
Is that something that you would welcome?
Do you think it's even a feasible idea?
We would need to look at what they can put in place, what other type of guarantees they can put, what type of systems can they put in place and intensity they can put in place to protect these sailing routes.
And then we'll have to take it from there.
Without knowing what the solution is, it's very difficult for me to deal on the hypothetical.
But what I can say is, whether this has a diplomatic solution or a military solution, We are eager to see the Strait of Hormuz reopen.
We are eager to having free traffic and freedom of navigation restored.
But it will have to be with a safety first in mind and something that I think is going to be important for us and is going to be important frankly, for all the vessel owners that are concerned by this situation.
Vincent Clerk there, the CEO of Merck's, the big shipping giant.
He was talking to Jonathan Josephs.
Well, many of those Merck's ships will be taking cargo from East Asia to Mexico and they've been grappling with supply chain disruption caused by the Trump administration's tariffs.
Mexico has faced extra tariffs on products that it sends to the US, but at the same time, is also attempting to stop a flood of Chinese imports into Mexico.
Ted Seifer has been speaking to businesses in Mexico City.
Mexico City's historic center is home to majestic colonial-era churches, ornate palaces and the remains of the great Aztec pyramids.
They were built over.
It's also a bustling commercial district and in recent years it's become a crucible for global trade tensions.
Here in the center's traditional garment district, you can find block after block of small shops and street vendors selling very cheap imported shoes clothing, toys and various other products, much of them from China.
Alex Mafud, the proprietor of his family's 75-year-old swimsuit shop, has eyed these developments warily.
Well, oops.
His business, Creations by Gladys, still designs and manufactures all of its swimsuits in Mexico.
The Chinese are invading the market in all sectors.
In clothing, they're flooding it with cheap, low-quality goods.
People focus more on the price.
So if it's cheaper, they buy it.
But for local manufacturers like us, it really affects us.
Since the pandemic, exports from China to Mexico have surged.
They totaled nearly $130 billion worth in 2024, a more than 60% increase from 2019.
Well, the presence of China in Mexico has increased dramatically, no?
This is Professor Enrique Dussel-Peters, who heads the Center for China-Mexico Studies at the National Autonomous University of Mexico.
China has become an important importer in Mexico of highly sophisticated Chinese goods that are being used mainly by US.
American transnational corporations.
According to official Mexican government figures, electronics make up the vast majority of imports from China.
And many of these components end up in products shipped to the US, where Mexico sends 80 of its exports.
To understand Mexico's recent tariff hikes, which double pre-existing rates to about 30 percent, Dussel says one need only look to the north.
And it again very quickly refers to the pressure of the United States, which has been very clear since early 2025.
We do not want to see in Mexico China.
We don't want to see Chinese tourism, Chinese investment, Chinese trade, Chinese technology, Chinese telecommunications.
There's another important dimension of China's trade with Mexico.
A good portion of it is off the books.
Over the past couple years, Mexican authorities have periodically raided shopping plazas across Mexico to seize tons of contraband products from China, including in Mexico's historic center.
The official line is that they are trying to protect domestic manufacturing in Mexico.
I recently chatted with a shop owner, Paula Tapia, at one of these plazas in the historic center.
Her inventory is varied.
Cell phone, accessories, athletic wear, t-shirts.
Some products are from here, Mexico City, but some come from China.
Paula is not a big fan of the Mexican government's efforts to clamp down on trade with China.
She says they've led to higher prices and that the raids on suspected contraband unfairly impact vendors with limited resources.
I think it's bad because we all have needs.
Even if we don't always do the right or wrong thing, I feel we need to think and put ourselves in each other's shoes.
There is another reason why Mexico may be keen to take a harder line toward China.
This summer, it will join officials from the US and Canada to renegotiate their longstanding free trade agreement, known as the USMCA.
Mexico's tariffs may at the very least signal that it's on the same page as its powerful neighbor to the north.
That was Ted Seifert reporting for us there from Mexico City.
George, obviously there's been a lot of attention on oil prices over the last two weeks or so the war in the Middle East but we are still expecting to see blanket tariffs of 15 on all goods entering the US.
So businesses in the US must be preparing for that.
Right.
Have been for some several months now.
And there's a mix of things that businesses are doing.
Some are swallowing some of that cost and baking it into their lower profit margins.
Others are raising prices very cautiously and looking to the left and right, at their competitors, to see what they're doing.
So it's happening across the board in many different industries.
Is there a bit of confusion though, after that Supreme Court ruling on what tariffs should be paid, whether there's going to be a rebate.
Are we any clearer on what's happening there?
No, we're much less clear after the Supreme Court ruling, at least before we knew.
All right, there are tariffs.
We have to deal with them.
We can do A B, C or D, But now we don't know if tomorrow there'll be tariffs or not, whether we'll get some of our money back in a refund lawsuit.
So a lot more ambiguity than we had just a few weeks ago.
Well, yeah.
But despite all of those tensions in the oil market and with tariffs, some companies in the US are rushing to raise money, aren't they?
So Amazon's leading the way in what could be the biggest US corporate bond sale.
When a company sells bonds, it means it's going to borrow money from investors.
Is that basically what that means?
That's exactly what it means.
We need more money and we don't want to share our equity.
So please lend us some.
Amazon is a very high quality credit.
So how much money they are looking to borrow from their investors?
I think it's up to $50 billion.
I think they did $37 billion today.
That's the biggest offering since 2013.
That's a little while.
And the fourth largest one-day bond offering in history.
So that's big money.
So it's huge money.
They look like they're heading towards that 50 billion.
What are they going to use it for?
Well, they use it for all kinds of corporate purposes.
It's interesting that as sovereign credits like U.S.
Treasury bonds or British gilts become slightly less attractive, as politicians don't seem to be very responsible.
Companies like Amazon that have the discipline of the market to keep them tight-fisted look like a more attractive place for investors to lend money.
So you'll see more big offerings like this.
I was going to ask you, are other firms looking to raise money in a similar way?
Yeah, there are several large companies looking to raise, not as much as Amazon.
Amazon's a very large company.
But as other big companies look to continue spending on AI, you can expect some of that money to come from the debt market, not the equity side.
I was just about to say those words.
Is that the AI, artificial intelligence, is that what you think is driving it?
Oh, it's huge.
I think this year we're expecting some of the largest AI spenders to spend $650 billion.
And Sam, that's triple what they all spent collectively in just 2024.
Wow.
Thank you so much, George Conboy, for joining us today on the program.
Thank you to you for listening.
Josh Martin was the producer.
I'm Sam Fenwick.
Don't forget to subscribe to our podcast.
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