Latest / The Fourcast / Iran ceasefire: has Tehran outplayed Trump?

Transcript

Iran ceasefire: has Tehran outplayed Trump? · The Fourcast

0:00
We haven't got to the doomsday scenario where the oil goes to
0:04
$150.00 and the whole world goes into recession.
0:07
But that depends on the Strait of Hormuz being open.
0:11
Is it open? No, it's not.
0:13
It depends on the ceasefire holding.
0:15
Has it held? It hasn't held.
0:17
If this ends without a formal agreement and just sort of
0:20
sputters to a halt, the Gulf states are left in such an
0:23
exposed position. I think it has landed with
0:25
Donald Trump that this is unpopular, but this is doing
0:28
badly for him and that surely weakens his ability and his
0:33
credibility now in terms of where we could come back.
0:40
Hello and welcome to forecast Indicators for a Middle East
0:44
Ceasefire special with me, Krishna Guru Murphy, alongside
0:47
the defense and intelligence analyst Mark Urban.
0:50
On forecast indicators, we'll look at the signals analysts
0:53
watch most closely. We'll separate the wheat from
0:56
the chaff, the noise from the signal, the tell tale signs that
0:59
suggest imminent and significant change may be coming.
1:02
And this week, we're joined by Economics Editor Helia Ibrahimi
1:06
with her analysis of the key economic indicators driving the
1:10
market. So does this ceasefire have a
1:14
real chance of becoming a lasting peace?
1:16
And has a global economic crisis being averted at the last
1:20
minute? Or perhaps just kick down the
1:23
road until it flares up again. As we speak, Mark, we're we're
1:27
in this sort of curious phase where we're waiting for talks to
1:30
begin in Pakistan between JD Vance for the Americans and the
1:37
Iranian speaker Gallibaf, who appears to be the man the
1:40
Americans think is in charge. But it but it may not happen
1:45
given what's been going on in Lebanon.
1:47
Yes, indeed. And so that's my first
1:49
indicator. Not quite.
1:51
Does Gallibaf turn up, which is clearly a rather a critical
1:54
thing to happen for there to be talks, But is there an
1:58
understanding about Lebanon being part of this deal or not?
2:02
Because he said he's posted on social media.
2:04
But it has to be. I mean, he's drawn it even more
2:07
broadly than that, hasn't he? And and therefore, you know,
2:11
does Trump say to the Israelis cool it in Lebanon, even if it's
2:15
just temporarily? I mean, we really don't know
2:19
exactly how this is going to play out, but the signs on the
2:22
ground are that definitely Israelis are not going at
2:26
targets in Lebanon in the way they were in such a spectacular
2:31
and costly in human terms way yesterday.
2:34
I. Mean the Americans are sort of
2:35
saying, well, this is sort of crossed wires.
2:37
I mean, certainly it is true that in the first couple of
2:40
weeks of the war, when I was in Israel, the assumption was that
2:46
Lebanon is a separate theatre, as it has been before.
2:50
That there was a war in Lebanon that was separate to the 12 day
2:53
war with Iran, separate to Gaza. And that that's its own thing.
2:58
And even if the Americans want to cool it in Iran, then we'll
3:01
decide when we stop in in Lebanon.
3:05
But that is clearly not what Iran thinks now.
3:08
Or what the Pakistani Prime Minister, who was well on the
3:12
face of it that he's brokering the talks, thought in his tweets
3:15
where he announced it, that included Lebanon.
3:17
Yes. I mean, look, if you go back
3:19
before the 7th of October, Israeli strategic theory or
3:23
intelligence analysis was that Hezbollah was there as a sort of
3:28
supreme deterrent to stop people attacking Iran, particularly
3:32
Israel, obviously, and that if Israel attacked Iran, there'd be
3:35
this huge rocket barrage. Then during the campaign in the
3:38
latter part of 2024, the Israelis managed to break the
3:42
linkage both with Iran, which did not immediately respond with
3:47
enormous bombardments to help Hezbollah, and with Hamas, where
3:51
a lot of people had said no, no, no, Hezbollah can't be split and
3:55
just leave Hamas to fight the Israelis on their own.
3:57
But in the end, they were. Now, of course, we now know that
4:00
the deal done then was not as enduring or definitive as as the
4:04
Israelis in particular would like to have hoped.
4:07
But that whole question about linkage is always there between
4:10
Hezbollah and Iran. And so does Hezbollah.
4:13
Does Iran, I'm sorry, decide that actually in terms of
4:16
rebuilding Hezbollah, it's maybe not such a bad thing if they
4:20
stop, too? These are complex equations that
4:23
are very hard to read right now. I mean Helia, as things stand,
4:28
does it look like disaster is averted or have we just not
4:31
realised how much damage has already been done?
4:35
Well, look, there's a very fragile de escalation that takes
4:38
away the immediate risk but hasn't really solved any of the
4:41
fundamental problems. And I was looking at the oil
4:44
price just before we came into the studio, and it's just shy of
4:49
100 bucks now. That means we haven't got to the
4:51
doomsday scenario where the oil goes to $150.00 and the whole
4:56
world goes into recession. So there is an idea that you
5:00
could get a very short, sharp inflation shock that at a
5:05
macroeconomic level is resolved by the end of the year.
5:09
But that depends on the Strait of Hormuz being open.
5:13
Is it open? No, it's not.
5:15
It depends on the ceasefire holding.
5:18
Has it held? It hasn't held already.
5:20
And it requires people to know how to operate in the Strait of
5:24
Hormuz. And so far, ship companies,
5:27
buyers of oil and yes, and indeed the Gulf states don't
5:30
quite know how this toll system, how this new reality is going to
5:35
work. And already people are feeling
5:37
what this conflict means in terms of airfares, in terms of
5:42
petrol prices, in terms of transport costs.
5:45
Well, what's your key indicator then?
5:47
Well I would say is it working? Yeah, well, the thing the key
5:50
you have to look at is how many ships are getting out of the
5:53
Strait of Hormuz and how many are getting out.
5:56
Hardly any The the should be about 130 ships that get out of
6:01
the straight informers everyday everyday and that is not
6:05
happening at the moment. And this is day one.
6:07
And not only that is that Lloyds List is talking about ship
6:13
owners not understanding who they're going to pay this toll
6:17
to. The IRGC today have put out this
6:20
map saying, be warned, all of these locations have mines, so
6:25
avoid those and come through this passage.
6:28
But people don't know how they're going to pay this.
6:31
Are they going to pay in crypto or they're going to pay you
6:34
aren't. Yeah.
6:35
Well, because the Iranians want to avoid dollars, basically.
6:39
But how does that system work? You know, can can ship.
6:43
There was one conversation I was having about whether insurers
6:46
would end up footing this bill because could you claim it
6:50
through some kind of piracy? But none of this has been tested
6:53
out in the courts in the real world.
6:57
So it's, it's, it's not working so far.
7:00
And the problem you have is we haven't had oil shortages for
7:04
this month because we're all using the oil from February.
7:08
Starting from now, just from now, we are definitively going
7:13
to have less oil and less gas in the world.
7:16
So one of the things, another interesting indicator which
7:18
which I spotted yesterday was Amman saying they wouldn't go
7:22
along with the toll booth system.
7:24
Now, obviously, they're on the other side.
7:26
Territorial waters. Exactly.
7:29
And there are these rumours in shipping circles that ships have
7:33
been switching off their AIS, their identification system and
7:36
sneaking through Amani waters. Is there anything in that do you
7:40
think? Well, I think there's definitely
7:41
proof that people have been switching off the AIS to to
7:46
disappear, but it's obviously very dangerous.
7:49
I mean, people have been talking about it's uninsurable.
7:51
Well, yes, it is insurable, but at a very, very high cost.
7:55
And you're endangering the crew on board because can you get
7:59
through the Omanis? The Iranians are saying, IGC are
8:03
saying actually that they're going to share this new toll,
8:06
new high charge reality with the Omanis.
8:10
But there's a big discussion, You know, we were talking this
8:13
morning, Krish, about, you know, is it free 3 waters?
8:16
The head of the International Maritime Organization was saying
8:20
this morning, these are free waters governed by a treaty
8:24
under the UN, and the Iranians have no legal rights.
8:29
Obviously, Iran feels very differently.
8:31
Well, that's the UN Conference on the Law of the Sea, to which
8:35
they argue that there's a specific article that they
8:38
didn't accede to relating to the right of transit, apparently.
8:42
So they're trying to carve out a legal argument for why it's
8:45
legal. But of course, it's completely
8:47
different, isn't it, to the the Suez Canal or the Panama Canal?
8:50
You know, man made. Waterways, yeah, which the
8:52
people who dug them had to get their money back.
8:55
But it does, I mean, you, you, you can see that, you know,
8:58
clearly there's, there's lots of commercial activity in, in those
9:02
man made canals. In fact, Panama Canal has become
9:05
even more commercial with interests like the US president,
9:09
you know, making sure that Blackstone got investment in.
9:13
So you can see why the Iranian authorities when they're saying
9:17
there's been so much infrastructure damage, why they
9:21
would want to recoup some of that money.
9:23
I think what's not clear is even if you accept that, which the
9:26
Saudis are unlikely to, how do you then operate that?
9:31
Who does the money go to and what's the system that operates
9:35
that that toll being paid, I mean?
9:36
The the really extraordinary thing in the last couple of days
9:39
has also been though that while Aman has says we don't says we
9:42
don't want to operate a toll, the person who says he does is
9:45
Donald Trump. Absolutely.
9:48
And who, who says it's a beautiful thing that maybe he
9:51
will share this now? I mean, I, I was talking to
9:54
Yvette Cooper this morning and she was criticising the Iranian
9:57
idea at tolls. I said, well, it's not just the
9:59
Iranians, is it? It's the Americans as well.
10:01
And she was saying, no, no, no, no, it's not, It's not really.
10:03
I said, well, he said it on the record, you know, sort of that
10:05
he, he thinks there's a lot. Of things on the record, though.
10:08
And, and she was sort of Pooh poohing it and saying, well,
10:10
yes. But you know, we, we've been
10:12
talking to the, the American authorities in great detail
10:16
about this. And they're, they're, they're
10:17
not, they're not really going to get involved.
10:20
But it tells you something about the mindsets of Donald Trump
10:24
that he is still in that, what can I get out of this?
10:27
Because he is very well aware that as things stand, they're in
10:31
a worse situation to the one they were in before the war,
10:35
whether it's in in terms of the the, the straits or any of the
10:39
other military assets as well. I mean, Ellie, it's interesting
10:43
that you mention the Saudis there because of course you've
10:46
got this block of major oil producers, the Saudis, the
10:50
Emiratis, the gas from Qatar, Kuwaitis, who feel that they've
10:55
been completely out manoeuvred by this diplomatic move,
10:59
particularly as you say, Christian, with Trump apparently
11:02
saying it's fine and they they're all saying they're not
11:06
going to pay it. It's a huge crisis, isn't it for
11:08
the Gulf monarchies. If if indeed the toll booth
11:11
system goes ahead, but they're blocked or or, how does that
11:16
result? Well, I.
11:16
Don't know if you know how, how do they?
11:19
You can imagine the Saudis putting a lot more money into
11:23
their East West pipeline. You know, they can get at the
11:26
moment they can bypass the Strait of Hormuz with about 5
11:31
million barrels a day going out to the Red Sea and the Yambu
11:35
port. But will they now double down on
11:38
that? Will, will other Gulf countries
11:41
look at trying to create ways to avoid the Strait of Hormies?
11:46
Do you imagine they would the problem they face?
11:48
They've said it in the UAE. The problem they face is it
11:52
takes time to build these pipelines.
11:54
And even if you build them, you're going West and actually
11:58
Middle Eastern oil goes east. So how you're making the trip
12:03
now more costly And in fact, in the Suez Canal, you can't get
12:06
those massive big super tankers. So you're taking smaller ships a
12:12
longer way. So there's a workaround, but
12:15
it's much more costly. Doesn't it bring you back
12:17
though, to the talks and, and what is actually possible, you
12:21
know, and, and whether the comprehensive piece that Iran
12:24
talks about in which you know, it will not be attacked again in
12:27
a year's time or in two years time is achievable given how far
12:31
apart the 2 lists of points that they have been talking about.
12:36
And either side are. Because you know, the the
12:41
planning for the future depends on whether you can have a piece
12:45
or whether they just walk away and say, well, it's over because
12:48
neither of them want to go back to war.
12:51
You mean it's over without a deal?
12:52
Yes. Yeah, No, I think that's very
12:54
possible. But then I I think one thing is
12:57
absolutely clear is that if that happens and the rate of, of
13:02
violence and everything else lowers and that kind of
13:05
normality returns a gulf. State kind of normality.
13:08
A Gulf state kind of normality. Be spending massively on weapons
13:12
to refill their stocks of patriots and talents and
13:15
everything else to fill the gaps that were exposed to drones or
13:19
whatever and massively on infrastructure.
13:22
I mean, it is a fascinating thing that that East West
13:24
pipeline came out of the 1980s tank war, that the Saudis made
13:28
that huge investment in infrastructure and to.
13:31
To avoid the Iran Iraq war. Exactly.
13:33
So the tank so they can, so they can do it, they can do it again,
13:37
I think. So the question there, Mark, is,
13:39
has Iran got to peak power strategically?
13:44
You know, up until now, they're control all of the Strait of
13:48
Hormuz was all a theoretic idea. They now know they can control
13:53
the Strait for a prolonged period of time and cause these
13:56
economic repercussions all across the world.
14:00
But just at this moment where they are at maximum strategic
14:04
power, the other Gulf countries are going to make, as Chris, you
14:08
were saying, these alternative plans, these workarounds.
14:12
And so does that mean ultimately down the road Iran loses some of
14:17
that strategic power? So short term volatility, but
14:21
long term workarounds. And think about the importance
14:24
of places like Abu Dhabi in Iranian trade before this, the
14:30
idea that they can simply go back to business as usual.
14:33
Having bombed Abu Dhabi for the past few weeks, I think he's for
14:36
the birds so. Or Dubai, Think of the
14:38
population of Dubai. That's Iranian, Iranian
14:41
businessmen, Iranian businessmen with oil money, they want to get
14:46
out, you know, how is that going to work?
14:48
I. Mean, Mark, if you if you think
14:49
about how the the Gulf states are reacting to this, how
14:53
uniform is it? You know, do they agree on
14:57
whether this is a good or a bad thing?
14:59
And what do you make of these suggestions that the UAE
15:03
actually launched attacks on Iranian installations
15:08
themselves? Well, that's my other indicator
15:10
for today. I mean, these extraordinary
15:12
reports that started filtering around yesterday that an Iranian
15:17
oil terminal on the island island of Lavan had been hit by
15:22
United Arab Emirates jets, Mirage 2000s was the claim.
15:26
Now, initially, some people just said, look, this is
15:28
disinformation. The Israelis have tried to
15:31
imply, for example, that Gulf states were taking part in air
15:35
strikes before, but it wasn't the case.
15:37
But the farce the the Iranian news agency, one of them then
15:42
said it was the UAE. So there seems to be.
15:45
And indeed, Israel and the US have denied hitting this oil
15:50
terminal. So why?
15:51
Why would they be doing it? The Iranians have been
15:55
absolutely malleting their oil infrastructure for the last five
15:59
weeks and indeed Dubai Airport, you know, everything else of
16:02
value to them and perhaps at this moment as the ceasefire was
16:06
coming in and indeed the Iranians broke the ceasefire in
16:10
firing more missiles and drones at the UAE yesterday.
16:12
And also the pipeline, one of the things they did in
16:16
retaliation for saying the ceasefire was broken is hit that
16:20
Saudi pipeline that goes from east to West.
16:24
And I think Lavan, the island has seen a lot more Iranian
16:28
cargo leaving it in recent weeks because carriage is being bombed
16:34
so much. Actually, a lot of Iranian oil
16:37
exports are going from Lavan now.
16:39
OK. And so it's maybe a point of,
16:42
you know, vulnerability that the UAE are exploiting.
16:46
Yeah. I mean, for my money, I think it
16:48
probably was the UAE that did it.
16:51
And in a way, we've just, it's been talking about the
16:54
diplomatic aspects of this. And if it ends without a formal
16:57
agreement, I mean, it is very much the UAE putting themselves
17:01
back into the conversation in that sense.
17:03
Now, you asked, you know, what's the difference between these
17:07
states? Now, before this started, Oman
17:10
in particular would have said we have a close relationship with
17:12
Iran. Qatar would have said, well, you
17:15
know, our good offices are open to everyone, including Iran.
17:18
You know, some of them would have said they had a close
17:20
relationship, but I think Abu Dhabi would as well in trading
17:24
terms, at least what we've seen through the war, if you want to
17:28
see expressions of Iranian ire or anger or whatever, by the
17:33
count of missiles and drones, we've seen them very heavily
17:37
hitting, hitting the UAE and Kuwait.
17:40
The the states they perceive to be closest to America in the
17:43
case of Kuwait, closest to Israel in the case of the UAE,
17:47
less so on some of the other countries, but it's not a huge
17:50
difference. I think even the Saudis have had
17:52
about the same number as have been fired at Israel.
17:55
So, so they really have been hitting them quite hard.
17:58
And I think this is an area where you can say an Iranian
18:02
strategic aim at the outset has failed, which was to get.
18:05
To peel them away. Yes, to get some of these
18:07
countries to say no, you can't use our bases to the US that
18:11
that has completely failed. Although there are people
18:14
speaking with huge anger now in in those countries at the
18:20
failure of that alliance to to protect them from attacks.
18:25
So they were angry with the Israelis, obviously for, for
18:28
killing Khamenei at the start of it and with the Americans, as
18:30
you say, and and of course, I think.
18:31
Americans are supposed to be protecting them, but instead
18:34
they've they've started the war in that in this instance.
18:37
So there is, I think, a feeling that that deal hasn't hasn't
18:41
survived contact with oxygen. Indeed.
18:44
And Qatar, of course, after the Israeli attack on Hamas there
18:48
late last year, felt they had a copper bottom security packed
18:53
with the US, more extensive actually, if you read the words,
18:56
than anything the US has with Israel.
18:59
But yeah, I mean, look, I think the Americans would say, well,
19:02
we've tried to help Qatar in various ways by helping them to
19:06
shoot down missiles early warning, all those sorts of
19:08
things. But yes, I think going forward,
19:11
and particularly in your scenario, Krish, if this ends
19:15
without a formal agreement and just sort of sputters to a halt,
19:18
the Gulf states are left in such an exposed position.
19:22
I mean that that sort of informal end to the war, I
19:25
suppose, is designed to make Iran feel that it could come
19:29
under attack again at any point. And the Americans are at great
19:33
pains to say our people are there, our soldiers are ready.
19:36
We heard Eggseth sort of bragging away.
19:38
But the problem you have yesterday, we're ready to go
19:40
back in. The problem you have is that the
19:42
the reverse is also true. Then the ships that are trying
19:46
to get through are also perpetually at risk.
19:49
So that means that it's a riskier idea to try and export
19:55
1/5 of the world's global oil and gas supplies and that is
19:59
going to have a huge impact. And, and already is having an
20:02
impact on American public opinion, I think.
20:04
And I think that that that's the thing I, I will be watching, I
20:07
think over the coming days because I think one of the most
20:09
significant moments for me this week where you thought, I think
20:13
I know where this is going now and why I didn't get too alarmed
20:17
by the talk of civilized civilizational erasure was Trump
20:20
on Monday, on Easter Monday saying, well, I'd like to go in
20:24
and get the oil, but the American people want us to come
20:26
home. And he had read and someone
20:28
said, well, how do you know? And he said I'm I'm good at
20:30
reading public opinion. Well, only after I've been told
20:33
off by Tucker Carlson. Yes.
20:35
But I think he, I think, I think it has landed with him at long
20:38
last that this is unpopular, that this is doing badly for
20:42
him. And although it is popular with
20:45
people who identify as MAGA, it is not even popular with non
20:50
MAGA Republicans and it's very unpopular with independents and,
20:55
and Democrats and, and, and that surely weakens his ability and
21:00
his credibility. Now in terms of, well, we could
21:03
come back because it doesn't really look like they could.
21:07
No. And if you've been looking as I
21:10
have over the past few weeks, at the indicators of mobilization
21:14
of sufficient resources, be they warships, be they brigades of
21:18
army troops or U.S. Marines or whatever, to go in
21:21
and take the Strait of Hormuz, secure it by military means.
21:26
We just haven't seen those. And you know, the idea that you
21:29
would suddenly mobilize 10s of thousands of US reservists, as
21:33
they did in 2003, for example, to go and do regime change in in
21:37
Iraq now is, I think, inconceivable in in that
21:40
atmosphere that you're describing.
21:42
And of course, with the midterms looming in November.
21:45
So what? What do we think was going on
21:46
with the mobilisation of airborne and Marines, but in in
21:52
ridiculously small numbers to actually take the Strait of
21:56
Anaharg Island? Yeah, I think as they say, they
22:00
were developing options and they weren't necessarily the ones
22:03
that were frequently thought about, IE, as you say, take the
22:07
island or take the straight. I mean, taking the straight is
22:10
clearly a precursor to getting any sort of force into the Gulf.
22:14
You can't get to the island until you've taken the straight,
22:18
and the forces were never sufficient to do that.
22:20
So what was it for? Well, you know, a battalion
22:23
landing team, they're trained in stuff like U.S.
22:27
Marines. I'm talking about boarding
22:29
tankers or other methods raiding that you might have done for
22:34
example, to take out anti ship missile batteries in the Strait
22:38
of Hormuz or indeed to say, had Trump at some point wanted to
22:41
say no, OK, if if Iran is going to stop everybody else's oil
22:46
leaving, we'll stop theirs. He could have done it by means
22:49
other than destroying terminals, things like that.
22:52
He could have done it by announcing to shipping owners
22:54
that we will board any ship that leaves the Gulf with Iranian
22:58
crude on it. So.
23:00
Instead, they've taken the sanctions of Iranian oil.
23:02
So it's. As a way of moderating the the
23:05
price. Yeah, there's actually the IGC
23:08
have a very mean meme game going on at the moment, the Lego Land.
23:13
It's worth taking a look at that, where they deride
23:17
President Trump for playing the market and trying to just get
23:21
the price down. But you were talking about
23:22
indicators and the American consumers and how voters will
23:28
react. And one of the very key
23:29
indicators is how do people feel it on the ground?
23:32
And in the US, not only are they feeling it at the gas pump and
23:37
in diesel, but you've got companies like Delta Airlines
23:41
saying there's going to be a 2 billion hit to the company and
23:44
they're going to not only raise airfares, but add on baggage
23:49
fees. You've got companies like Amazon
23:52
saying they're going to add surcharges.
23:54
You've got the US Postal Service saying it's going to add a
23:57
surcharge because the price of diesel has gone up.
24:00
And we're going out next week to talk to American farmers about
24:04
what they're planting, how it's impacting them because huge
24:08
amount, again, 1/5 of the world's fertiliser comes from
24:13
the Persian Gulf. So it's going to have an impact.
24:16
And one of the things, Mark, I'll be looking at is corn
24:19
prices because fertiliser is essential.
24:23
Are they? OK for this this.
24:25
Growing season, no. This growing season, no, because
24:28
the price has already gone up. So lots of decisions are being
24:31
made where people are not planting corn, they're planting
24:35
soy instead. And So what happens at the end
24:38
of the year is that there'll be less corn around.
24:41
And that kind of shortage always pushes up prices.
24:44
What, what happens just economically on the whole
24:46
question of debt as well? I mean, you know, we, we've seen
24:49
the price of government bonds going up over the last month.
24:54
Does this have lasting economic pain for us?
24:58
You know, so, so in terms of trying to sort of gauge what is
25:00
the lasting hangover of this for Britain, let alone, you know,
25:05
the rest of the world, you know, 11 interest rate rise maybe.
25:10
Market says 2. Maybe two.
25:12
OK, yeah. And longer term debt payments.
25:15
I mean and compared by the way, and compared to a situation
25:19
where we were going to get interest taken away, we were
25:24
going to have the Bank of England cutting interest rates.
25:27
I think what the ceasefire does is it gives a bit of breath to
25:31
the Chancellor who you know, UK has had the worst performing
25:36
bonds. We've had our yields go up.
25:38
It's been the most acutely impacted by this crisis.
25:43
We're an economy, unlike the US economy we're talking about.
25:46
What will this mean for Americans?
25:48
The American economy has been quite resilient.
25:51
So yes, it's hurting people at the palms, but the US is an
25:55
energy self-sufficient country. In fact it's a net exporter.
25:59
In fact it's companies are doing quite well, refinery companies
26:03
and oil companies. It's economy is doing well for
26:05
Britain. That is not the case.
26:08
We are energy dependent. We are exposed from a guilt
26:12
perspective, from a government borrowing perspective.
26:15
The government doesn't have much fiscal headspace to protect
26:19
consumers. So it's really posed a massive
26:23
quandary of what the government can do.
26:25
So it will, it's kind of wait and see.
26:28
It's going to be really hoping that this situation solves
26:32
itself, doesn't become completely long dated.
26:35
Where I'll have to act. And Mark, I mean, ultimately we
26:38
have, we haven't really spoken about who blinked, you know,
26:41
when it comes to why we got this ceasefire.
26:44
Do you do you think ultimately it was because Trump was
26:47
threatening Armageddon or because the economics of this
26:52
was looking nightmarish for the whole world?
26:56
Look, I think it's been obvious since fairly early on that
27:00
having failed to achieve regime change, Trump was probably going
27:04
to have to try and back out, you know, in some sense, declare
27:07
victory. So in that sense, we've been
27:10
waiting for him to blink. And of course, then there were
27:12
the ultimatum, ultimatums that weren't acted on in terms of
27:17
opening the straight, including the even the profane ones.
27:20
So look, in that sense, I think that's fairly apparent.
27:23
But the one thing I have to say is that over the last couple of
27:26
weeks, there has been quite a lot of action by the Israelis
27:31
and Americans against what you could call infrastructure
27:34
targets, whether it's the steel mills, the chemical works, the
27:39
bridges, you know, other transport nodes in Iran.
27:42
Now, whether that had some role in getting the Iranians to the
27:46
table, I think is, is a fascinating question because
27:50
certainly for the first few weeks they were making it
27:53
absolutely clear they had no interest in negotiation.
27:56
You know, we've been here twice before with the Americans.
27:58
We got bombed both times. That was their line, you know,
28:01
don't even pick up the phone. But clearly they are now
28:04
seriously entertaining and trying to get to terms.
28:07
So did that shift towards infrastructure targets have an
28:10
effect? I'm not sure.
28:12
And what state would you say the Iranian economy is going to be
28:16
in when this? I mean, this is this is the
28:19
problem. Iranian economy was really
28:22
struggling in the 1st place. I mean, the reason for all of
28:25
those, those demonstrations that you saw wasn't just political.
28:28
It was actually business guilds coming out and coming to the
28:31
street because they were so frustrated and fed up with the
28:35
Iranian economy. All of these attacks,
28:38
unfortunately, are going to hurt the Iranian people.
28:42
You know, you're talking about Iran, IRGC, the regime being
28:47
strengthened, but the Iranian people are going to really
28:49
suffer. The other thing I will
28:51
definitely be looking out for now that we're in the ceasefire
28:53
and it is harder for Iran them to keep saying, well, we can't
28:56
tell you anything about who's who's saying what and why We
29:00
haven't seen the supreme leader is who's really running things,
29:03
who's really in charge now. Now, Gallibar, the speaker is
29:07
the man the Americans keep talking about and he's the man
29:09
apparently going to Islamabad. Does that make you think, well,
29:14
he can't actually be the man at the top Then you know, you, you
29:18
don't send, you don't send the man right at the top.
29:21
Do you need to to the talks? No, well, and indeed, you know,
29:26
JD Vance is is not the man at the top.
29:28
And one gets the sense he's almost being sent to be bound
29:31
into the war whether or not the talks succeed or not, having
29:34
distanced himself in various ways.
29:37
I think there was some reporting from the White House yesterday
29:41
that they consider much Taba Khamenei to be very much in
29:44
charge and have had messages, exchanged messages with him and
29:48
that he's he's, you know, signed up to this idea of peace.
29:52
So here's. The regime change they're
29:53
talking about. Exactly.
29:56
It's a very different regime. The president says Trump, that
29:59
is. Yeah.
30:00
So So that in theory I guess he is in charge or Gallebaf or
30:07
Vahidi, the IRGC commander. Yes, but these people will have
30:12
to sort of start emerging. You would have thought if the
30:16
war is is over for the foreseeable future and then
30:19
these things will become slightly more clear.
30:22
You'd hope. You've got the RGC basically
30:24
control controlling a lot of Iranian oil, and you've got a
30:29
whole series of Iranian oligarchs that run Iranian oil
30:34
with the help of different intermediaries through shipping
30:38
and infrastructure companies and shadow fleets and shell
30:43
companies all the way with the help of China, for example.
30:47
Those characters are not the characters that are going to
30:50
turn up in Pakistan, but they are the people who have control
30:54
over Iran's finances and in control of Iran's revenues.
30:59
The final surprise I just wanted to talk to you about was, was
31:02
was Netanyahu. You know, Netanyahu started out
31:06
this war apparently as the master manipulator who got Trump
31:10
to take this decision, who had gone over to Washington, had
31:13
done the briefing, persuaded the Americans that this was the
31:16
right thing to do. And you could see that initially
31:19
it it was almost no matter how long the war goes on, this is a
31:23
strategic win for Israel because it weakens Iran.
31:26
It weakens Iran's ability to attack Israel in the long term
31:31
politically. Now Netanyahu is under huge
31:35
attack at home. They're saying this is a
31:37
strategic failure, a total mess. He was left out of this last
31:42
process of ceasefire talks. And he's almost gone from being
31:46
the surefire winner to a loser. Yes, and if you look at the way
31:52
the Israeli offensive against Hezbollah in late 2024 or the
31:57
so-called 12 day war last year worked out, they worked out
32:00
pretty well or looked pretty good at the time.
32:04
From Netanyahu's perspective, he chose War One too many times I
32:07
think and now he's been exposed to all kinds of negative
32:11
consequences. The fact that Iran suddenly by
32:14
the Strait of Hormuz manoeuvre, gets a way to refill its
32:17
coffers, you know, to leverage its control over global energy,
32:20
all of those things are things that I think put Netanyahu in a
32:24
pretty bad position. And as you say, Krish, political
32:28
opponents like Yehiel Lapid and Aftali Bennett have been
32:32
absolutely trenchant in their criticism of where Netanyahu has
32:36
brought the country. So far from being the sort of
32:39
victorious campaign that he hoped might launch his RE
32:43
election bid, I think he is now in in considerable political
32:46
difficulty over it. Can I add in another kind of
32:50
financial indicator that is is critical?
32:55
There's been a couple of instances where we've had some
32:57
serious irregularities on trading that have raised huge
33:02
questions you've had. Excess trader.
33:04
Well, you've, you've got before the ceasefire agreement was
33:12
announced and before the extension period to think about
33:16
it, there were two massive trades which are very unusual.
33:22
We talked to the, you know, Commodities and Metals Exchange
33:26
about the one that just happened this week, $950 million.
33:32
That's 1% of daily average outside the settlement period,
33:36
that's 3000 bets on oil futures were made.
33:42
Very unusual. And there's a big question about
33:45
whether the authorities in the US are going to properly look at
33:49
this. What the implication being?
33:51
These are public markets where people have taken massive bets
33:56
and you know, there is a lot of question marks about whether
33:59
they had inside. What does it take to work these
34:01
things out that they're happening?
34:02
I mean, could you use them as, as indicators?
34:06
I mean, you know, are they are they always do.
34:08
We need to look at trading volumes.
34:10
Pizzas in in Pentagon City. But we've we've spoken about all
34:16
of these things short term and some long term things.
34:20
Is the financial probity or credibility of the US going to
34:25
be a long term casualty of this? Because we always think of the
34:27
SEC as this powerful regulator that has the goes in, gets the
34:32
guilty men and women. Why?
34:35
Isn't it working US regulators, the only ones who have guns with
34:39
them at the same time, why isn't it working?
34:43
There's a lot of things that don't seem to be working in the
34:45
traditional institutional way. I think there is a move away
34:49
from one of the long term trends is de dollarisation.
34:53
You were we were talking about what do the Iranians want to be
34:55
paid in? They don't want to be paid in
34:57
dollars and you're seeing other countries do that.
35:00
You're also seeing other countries look at how they
35:05
create a secondary kind of trading system, economic system
35:09
that isn't reliant on the world. It's very complicated, Mark,
35:13
because at the same time, the US market is completely frothy
35:18
because the idea of AI is, you know, people don't want to miss
35:23
the next Google, the next Apple, the next Facebook.
35:27
So they don't want to sell everything.
35:29
They just can't resist the idea of getting in the market.
35:33
And that is actually giving President Trump quite a lot of
35:36
cushion. You talked about, you know, or
35:38
is he worried about, you know, treasuries going up and that
35:42
looking terrible and oil prices going up?
35:45
You U.S. stock market has given him a lot of cushion to do this
35:49
because it's surprising that there's some dissonance there.
35:53
Well, this is what they call exquisite privilege, isn't it?
35:55
In terms of US financials? Different rules to the rest of
35:58
the world. The reserve currency of the
36:01
world, you can't get away from it.
36:03
Just finally, Mark, I mean, what, what will you be looking
36:05
out for this weekend in these talks to, to work out whether
36:08
they're going anywhere or whether this is just sort of
36:11
face saving process to let things fizzle out?
36:15
Well, as you said, Krish, I think you know who turns up and
36:18
says what from the Iranian side and I think any indicators that
36:24
there's pliability on there rather maximalist, 10 points
36:27
that they were circulating there was the battle of who's 10
36:30
points were we really looking at?
36:32
But there's a clearly pretty maximalist and, you know,
36:35
there's this awful, I mean, dare I use the word tragic history in
36:39
a way of Iran overreaching diplomatically at various
36:41
moments, asking for too much. You know, some people, they say
36:45
they've only really given in twice.
36:46
Once was the end of the war with Iraq in 1988, and the other time
36:50
was that 2015 nuclear deal. Every other negotiation, they've
36:54
overplayed their hand. So that's what I'm looking for.
36:57
Is is evidence of, well, dare one use the word realism and a
37:02
real willingness to make a deal? Well, that's it for this edition
37:06
of Forecast Indicators. Until next time.
37:09
Goodbye.