Bloomberg Markets: Asia 04/19/2024

Andit is almost 11 a.m. in Singapore, in Shanghai.Welcome to Bloomberg Markets Asia. I'm Haslinda Amin.Here are the top stories. Oil jumping as U.S.officials confirm Israel has struck targets inside western iran.Brent rising above 30 bucks a barrel on fears of a major middle east escalation.Treasuries gained with the dollar angle as growing risk sends investorsscrambling for haven assets. Asian equities sliding.We have a great lineup of guests to discuss the sentiment on the markets.Barclays President Steven Dainton joins.

Us in just a couple of minutes.Plus, we speak with leading energy consultant Sheridan Fischer.Rocky on oil well, markets and risk of Moat.Let's get to everyone for a very close look.April. Yeah, we're seeing this wave of riskaversion gripping markets. And this was a reaction that we saw evendespite initially those reports being unverified.It's clearly a case of investors selling fast and then asking questions later.Traders not quite prepared for this sudden revival of Middle East tensions.And to be clear, we already saw markets.

Mostly in the red.And this was on the backdrop of those Fed speakers coming in hawkish.We also heard from the likes of TSMC, for example, lowering its outlook forthe chip sector. So the chips were really already badlyhit. And then as the Nikkei opened 1% lowerreally sagged. Those losses accelerated as thosereports about these explosions in Iran, Iraq, Syria started trickling in.Now we're also seeing the MSCI Asia-Pacific, a gauge of stocks in theregion hovering at the lowest level since early February.Now we're seeing, Brent, US crude.

Futures there both rising almost $3 abarrel above the $19 handle. And we're also watching out for theimplied volatility. Take a look at this chart if we can, andit'll show you that that implied volatility on crude is surging.So this suggests that we could see even more days like this, the swings in theprice action. And this makes you wonder exactly whatthis is going to mean for people that are watching the inflation front.Now, I want to take you to what we're seeing on the safe havens as well.The usual suspects are moving. We're seeing it on the dollar yen, Swissfranc, gold treasuries as well worth.

Highlighting here.We're seeing the yen moving below the 154 level against the greenback.The Swiss franc jumped as much as 1.2% against the US dollar early on in thesession. And this is worth noting because theSwiss franc has been capped recently due to dollar strength.So the moves today indicate how the Middle East tensions are perhaps abigger move up compared to the Fed bit toss.That's right. Classic haven play, ten year Treasuryyields. Look at that ten basis points Everlong.Thank you.

Now the latest on our top story.US officials confirming in the last few minutes that Israel has struck targetsin western Iran. That's after multiple reports fromIranian news agencies of explosions heard around the city of Esfahan.For the latest, let's bring in bloomberg senior editor Bill Ferris Bill.What do we know at this stage? Well, it's still still really the firsthour here of these reports coming in. We have, as you mentioned, two U.S.officials confirming that Israel launched a missile strike on westernIran. We have seen multiple unverified reportsof explosions taking place around the.

Region.And there's some thought that this these may be drones as well getting hit.We just don't know that much. Esfahan, as you mentioned, is the sitewhere there was a report of an explosion.That is also a city known for having a number of military bases and facilities.It's believed to be one of the places that Iran launched its April 13th attackon Israel from. So it would seem to be a natural target.But in terms of what has actually been hit, whether there are any casualties,those details have really not come in yet.We're just trying to find out the scope.

Of what appears to be taking place,possibly still taking place as we speak. That's right.I mean, it's been a decades long shadow war.The concern really is now that war is coming out to the open.I mean, what are the risks of that? What are people saying right now?Well, there had been a lot of pressure coming on Israeli Prime MinisterBenjamin Netanyahu after Iran's barrage of drones and missiles last weekend toto have Israel not really respond or not respond and force Netanyahu and othertop officials said that they had to respond in some way.It's really the nature of that response.

That people are going to be looking atvery carefully. There will be a big difference, I think,between, you know, striking a destroying a runway at a military base versushitting a barracks full of troops or anything like that.So it's too it's really too soon to know the extent and the damage caused.But those are the kind of things I think people will be looking at to see, doesthis, in fact, really amount to a significant escalation?Tensions are already quite high. Given all everything else going on inthat region and no one has an interest in seeing a much broader war break outbetween Iran and Israel.

So a lot of questions out there.Bloomberg senior editor Bill Farris, thank you so much for that.And for more on what all this means for our oil markets, we'll be joined laterin the show by Ferdinand Fish, Iraqi, the founder and chairman of energyconsultancy F, G E. And let's get straight to our specialguest joining us exclusively, Steven Dainton, Barclays, bank president, headof investment Bank Management. This is his first interview since takingup his new roles in February. Good to have you with us.I mean, we heard from April earlier about how it is a havenplay.

We're seeing traders gravitating towardsgold. What's dollar to what's treasuries, whatis the ultimate hedge against geopolitical risks in the Middle Eastright now? Well, firstly, thank you for having mehere. And I think what you're seeing isundoubtedly a rapid move away from risk assets.Risk assets during the course of this year have accreted substantially.And you're seeing even this morning with elevated geopolitical risk in the MiddleEast that has been evident over the course of the last four months, fivemonths really come to the fore where.

Investors moving.And I think it's very important that defaulting to safety.You've highlighted a number of them this morning.Gold, gold. There's been up over 20% during thecourse of this year. It's acted extremely well.Energy continues to be a place where clients are migrating capital toactively with a significant velocity. But then you also have to look atcommodities because this is causing a massive break in supply chain concerns.And I think you'll see a continuation of that concern evolving during the courseof the next four or five weeks as more.

Details come out of what's actuallyhappened today. But in aggregate, I think you will seethis flight to safety continue and a deflation of risk assets that we've seenreally since the start of this year. Stephen, how do you reflect all of thatin your portfolio, bearing in mind if you take a look at Treasuries and whereyields are headed and bearing in mind as well that tensions are likely toescalate from here? It is.Look, I think what you're seeing is now a move to geopolitical away from centralbank divergence and that migrates week to week.Obviously, over the course of the last.

Six weeks, you've seen a huge shift inwhere the Fed are looking to move. You've had three prints of CPI that aredifficult for the Fed, and I think you've now got this huge anticipationthat started with seven cuts this year migrating to very possibly one or twofor the balance of this year. You have the central bank in Europearticulating a clear path to begin that reduction in interest rates in June.So this central bank divergence has been right at the forefront of clients overthe course of the last six weeks. In particular, if you look at howgeopolitics emerges and lessons in that framework, I think today's events aredemonstrating a huge risk off awareness.

But that risk off awareness has beenunderway for a number of weeks. We were talking earlier in the showabout volatility in energy. Actually Equity Vol is up 40% this year.So you've seen equity markets begin to anticipate given the accretion over thecourse of the last three months some elevated level of concern andthat's been reflected again this morning.And oil and 80 bucks a barrel some say could get up to 100, perhaps even 120.Bearing in mind what the IMF said overnight, if we see a 15% upside in oilprices, we'll see inflation up 0.7%. How will that shape the thinking of theFed and where it goes from here?.

Well, it's extremely important for theFed and I think, you know, energy prices are a major contributor, as you know.I think, you know, nothing impacts US citizens more than the price of oilgiven the price of gas at the pump. And I think that that will be.Major concern not only for the Fed but the political system in the US.I think, however, I go back to what you've seen over the course of the lasttwo years with geopolitical events, events in Ukraine.Events this year, last year in the Middle East, real concerns about supplychain, the near shoring of assets in the US, in particular.The French shoring has been a massive.

Theme and I think you'll continue to seethis impact on supply chains in particular also be a factor in commodityprices. The price of copper up substantiallythis year, the price of aluminium up substantially this year, all by the way,within the context of a very weak Chinese economy, which is trulyextraordinary. So I think you're seeing not onlygeopolitical events come to bear, but you are seeing this very significantchange in supply chain and supply chain management be a material issue.You talk about higher vol even for equities.What are you advising clients to do and.

What are you hearing from your clients?What's happening with their risk appetite?Is it higher? Or are they hedging against risk?Well, you saw a number of clients at the start of this year move very, veryconsciously into equity assets. And you saw that through the lens ofwhat is going on in Japan. The Japanese equity market rallied over20% this year. Obviously, you've seen a compression inthe course the last four weeks, but that was reflected in most major equitymarkets. If you look at what was going on in theUS, the S&P traded up to 10%.

People were trying to find growth, sothey were becoming very comfortable with the inflationary cycle coming down.If you look at what the Fed's anticipated moves were and I highlightedearlier, seven moves anticipated towards the end of last year, that all gave ahuge amount of comfort in equity risk. So you saw equity markets rally verysignificantly at the start of this year. Actually, I thought they were extremelyresilient, but investors were desperately trying to find growth.And I think that that will continue to be a theme over the course of the nextsix months with the caveat that you now have these very substantial events thatare interrupting risk awareness.

And for Barclays, how are you boostingROIC at a time when you're also kind of like downsizing?It's a leaner organisation. Well, I think Venkat laid out veryclearly a statement with an Investor Day on the 20th of February.That statement was to demonstrate a simpler, more balanced business inBarclays. We have an investment bank that is verydiverse across asset classes, across the macro business, the equity business, thecredit business and the securitized products business.So we're very diverse from a product perspective, capable of transacting forclients across the entire asset class.

Spectrum.Secondly, we're also very diverse from a geographic perspective.I'm here in Asia this week, and we've had more than 50 years of relevance herein Asia, big business in India, perhaps. We'll talk about that later.But so we have a diverse portfolio of businesses within the AIIB, a verycapable of providing solutions and in positive risk awareness and negativerisk awareness. Stephen, before we go for a very shortbreak, just to touch on currencies, we've seen a full lot in Asiancurrencies on the back of the really resilient USD.How do you see this playing out?.

Look, a strong U.S.dollar is difficult for a number of people.You now have China and the US in very divergent positions from an economicperspective. You have weak equity markets in China,you have weak employment markets in China.The last thing they want is a weak currency.You have huge dollar strength. That's the default asset of safety and aFed that is now looking like it is going to reduce rates at a faster rate thanwas previously anticipated. So I think that a strong dollarultimately is problematic.

It's very problematic for emergingmarkets, as you know. And I think that until we get claritythrough this geopolitical issue, I think the dollar is going to continue toremain strong. And also expectations of interventionamong Asian central buying. Stephen Dainton is sticking around.Of course, he is with Barclays. Still ahead this hour, as G.E.shares their outlook on oil prices as tensions once again flare up betweenIran and Israel. Plus, we discuss India's elections andforeign policy with the Ananta Aspen Center.Keep it here with us.

This is Bloomberg. And. Well, classic haven play in terms ofassets in the markets. Gold futures currently up 14 to 1%.24 seven is the level we're looking at. Also gains for the US dollar as well asthe yen. And take a look where we are in terms often year yields for 5445. Of course you guys, bond yields havefallen pretty much across the curve, ten year yields down ten basis points, asyou can see on your screen. Well, let's get you to India.Six week national elections underway.

With a first of nearly 1 billioneligible voters starting to cast their ballots.For more, let's bring in Bloomberg News editor Mallika Doshi, who's outside apolling station in the southern city of Chennai, the capital of Kabul, now twostates. Mallika, the latest. Well, good morning to you, Linda.This is the world's largest democratic electoral exercise taking place in thefifth largest and fastest growing economy in the world, and therefore hasnot just domestic implications, but international implications as well.And it's a morning that I should remind.

You that India is amongst the fewcountries that has ties with both Israel and Iran.Coming back to the elections, like you mentioned.I'm in Chennai, in Tamil Nadu, one of the southern states in India that has sofar resisted Prime Minister Modi's charm.And that makes it a fierce battle that his party seeks to fight here over thecourse of the next six phases to come. Though Chennai will finish voting today.The goal that Prime Minister Modi has is not just to win a third term, but to winit with a super majority. That's 400 seats or 543.We'll know by June 4th if he is.

Succeeded.That's right. And all eyes on India, of course, afavorite market has had a stellar run, prompting a lot of people to say thatvaluations are overextended. But still, they say, pumping money intothat market. Well, that's right, Linda.It's an expensive market, undoubtedly, but it's also a market that seems totransmit earnings growth in a more efficient fashion.As Jp morgan was saying, you know, to Bloomberg just a few days ago, and it'salso a market that's pricing in the growth story that we've been discussingnow since last year when India was.

Hosting the G20.The potential for India to in many ways replace China as the engine of growthfor the world economy. So it's a market that's pricing both ofthat in. It depends on whether you're looking atthe short end or the longer term of the market.Did you tell me? That's right.Money to be made. Right back.Bloomberg's Monica Doshi in Chennai. Thank you so much for that.Let's get to our guest, Stephen Dainton, Barclays Bank president and head ofInvestment Bank Management is still with.

Us.Let's have your take on India is trading at 23 times forward earnings.For the most part. People say it is expensive, but when youtake a look at eight, nine, 10% growth potential, it's still a good opportunityto put in money. I think what you've seen very clearlyover the course of the last two or three years is a significant migration offoreign capital to India as demonstrated by growth.You have 7% GDP growth. Actually, Barclays has been in India for40 years. We have perhaps the most balanced bankoutside of the UK, in India, across the.

Private bank, the investment bank andthe corporate bank. And I think what you've seen is a truechange in investors mindset to find stability and growth.And I think that's really the migration from China towards India as foreigncapital has for the last 20 years been fully invested in China, invested in theenormous growth story in China. And I think with some of the politicalconcerns, the geopolitical concerns that we talked about previously, that capitalis now migrating towards India, it doesn't mean that it will migrateentirely. Of course not.Look at the scale of what China has.

But undoubtedly India has positioneditself as a manufacturing centre, an energy centre, a developed or developingmarket with very significant demographic and GDP growth prospects.People are expecting volatility during this election and they see it as abuying opportunity. Would you agree?I think what you've seen investors do is through each election, remember thisyear on this planet, we have more elections than we have ever had in thedemocratic world. I think you'll see markets react tochanges in politics. Capital finds stability.It finds stability and it finds growth.

And I think India has demonstrated overthe course of the last five, six years that it can provide that stability forcapital, for foreign capital come encourage growth.And it's had a very consistent growth profile over the course of the last twoyears. A lot of traders look at India in thecontext of China. We had China coming out today sayingthat it wants, you know, a capital market reform, saying that it wants tofocus more on value as opposed to speculation which has driven the marketso far. Is that game a game changer for you?Not no.

Look, I think central banks, politicianshave to be consistent more than anything.Capital loves consistency. As I said earlier, it loves stability.I think with some of the changes in China during the course of last threeyears, change in political regulation around certain industries, capital hasbecome concerned. Changes in geopolitical events.Capital has become concerned. In India, they are seeing all of theelemental elements of an emerging market, the growth opportunities that Itouched on. Plus, it also growing its presenceacross the emerging market portfolio as.

A whole.So I think that India, given what it has done in the last five years, trulydemonstrating that stability, demonstrating an ability to grow, willcontinue to accrete foreign capital. So when you look at Asia as a whole,where do you see the biggest opportunity?Some say perhaps it is Japan's time given a revival in investor sentimentthere. I think Japan is extremely interestingand you saw Japan perform exceptionally well last year.A big change in the dynamic of the central bank.Japan moves slowly, but it's very.

Deliberate and it has duration.So I think that you will see risk capital find Japanese assets over thecourse of the next two, five, ten years. So I think Japan is extremelyinteresting. But in that mosaic of Asia, you havesome unbelievable growth opportunities in Southeast Asia.If I look at what has happened and each economy will oscillate at differentlevels. But if you look at what is going on inIndonesia and. Malaysia.If you look at what is happening right here in Singapore and the growthopportunities here in Singapore and then.

Obviously Australia, that continues tobe a huge resource centre for the planet.So I think Asia in general continues to exhibit growth.If it can continue to exhibit stability, it will then accrete foreign capital ata faster and faster rate. Yet we're seeing emerging markets inthis part of the world being pretty much lacklustre, underperforming.What will it take to change? Do you expect that change to come thisyear? Well, when China falls, GM should rally.I mean, so you should have that dichotomy.The dollar is an issue.

The dollar strength puts enormouspressure on emerging markets. And I think that you do have to see thedollar start to soften to bring that change in emerging market mentality.I think you also have to see liquidity. And I think really it's incumbent on themarket participants to continue to provide liquidity into those markets.Fundamentally, the emerging markets are growing.They're growing at a faster clip than the emerging markets.And I think that ultimately in the course of the next two years will becritical for foreign capital and domestic capital.Stephen, I want to take a look at the.

Banking sector as a whole.It's no secret that most banks have been cutting jobs.I mean, have you seen the worst? I think what you've seen is everyindustry goes through various cycles. They adapt their workforce for thatcycle. I think a number of the US banks havealready reported this year. Mostly they reported very credibleresults during the course of their reporting season.And I think that you will continue to see them focus on efficiency in thecourse of the last year. Most of us have learnt about a lot.We haven't yet understood the full.

Opportunities and use cases of AIthrough through the industry and through industries.So I think there's a number of elements that are coming to help the bankingsystem, help industry as a whole create greater efficiency.Okay. Just wonderful question.When it comes to Barclays itself, are you at the tail end of it when it comesto job cuts? Look, we we go through a workforceplanning process like every industry. It is dependent on the shape of theportfolio of the businesses. It's dependent on the marketenvironment.

And I think that, you know, mostimportantly, as Venkat laid out in February, we are extremely focused oncost discipline within the organisation. We have a a large ambition to improveour profitability from 10% to 12%, and Venkat laid that out very clearly inFebruary. Stephen, great to have you with us.Composite again. Stephen Dainton, Barclays.Let's get you to markets right now where there is risk aversion pretty muchacross the board. Take a look at where we are in terms ofthose haven plays, getting beat up on the back of resurgent risks in theMiddle East.

Take a look.Where we are in the MSCI Asia Index are trading at session lows right now.And the big news is at this point in time in terms of benchmarks, include thetopic, the Nikkei as well as the Taiex, they're down more than 3%.And in the ethnic space, it is a strong dollar story, putting a lot of pressureon Asian currencies. Take a look where we are in terms of theone down more than 1%. The peso lower by 7/10 of 1%.The yen getting a bit up. It is traditionally a haven play interms of it is about crude oil. WTI crude up 2.7%.And that, of course, brings that.

Question, what happens to that fightagainst inflation? Well, coming up, the latest on theenergy markets with surges for radon for Iraqi as the US confirms Israeli strikesand targets inside Iran. That is next.Keep it here with us. This is Bloomberg. Let's get to April Hong for the verylatest risk off. It is absolutely risk off and there is alot of safe haven demand. In a way.This is a textbook case, classic example of how geopolitics can really throw aspanner into the works of financial.

Markets.Today, we're seeing a bid for safe havens, whether you're looking at thedollar, the Swiss franc or the yen. Gold is also catching a bid.But couple of things I wanted to highlight here in terms of safe havendemand, We're seeing the Swiss franc really burnishing its credentials as thesafe haven of choice. It is rising against the euro and thegreenback at a time where it seems like those monetary policy concerns, well,they're really being eclipsed by geopolitical tensions.Bitcoin also slumping today. And this is, of course, an asset classthat in the past has been spoken about,.

Touted as a hedge against geopoliticalrisk. While that argument really in doubttoday, the board, because I want to show you just how the risk aversion iscreeping into across assets. And we're seeing that showing up in thestock markets of Taiwan and Japan. That is moving off session lows, butstill really negative. MSCI Asia-Pacific still hovering nearthe lowest level since February. We are also seeing the Asian currenciesunder pressure, Renewed concerns amid the surge in oil prices.Brent, Of course, moving past the $19 handle at one point creeping back belowthat at the moment.

HOUSE Well, that's right.It's begging the question what happens to inflation?For more on crude markets, as senior energy reporter Stephen PINSKY, why am Itripping over your name today? Stephen?Stephen stuff. Jen Psaki joining us now.Well, we're talking about $100 oil yet again.Yeah, we are. I mean, we're not quite there yet.Oil prices are pretty volatile this morning.They jumped above $90 Brent, which was a 3 to 4% increase.But now they're kind of coming back down.

A little bit, back below $90.The market is going to be volatile as they digest what's happened with thewith the response from Israel. There are reports that, you know, Iranhas been able to shoot down some of the drones, that their nuclear sites werenot hit if the nuclear sites were hit. And that would kind of show anotherratcheting up of of tension between Israel and Iran, further spiraling theconflict deeper in the Middle East. But we're not seeing at the moment.You know, I think the market is really just seeing if this whole situationescalates to another level. And with prices coming down a little bitfor oil, it doesn't seem to be you know,.

The market seems to be sort of taking asmall sigh of relief, but everyone is anxious, anxiously awaiting what's goingto happen next. One focus point, of course, is going tobe what happens with the Strait of Hormuz.It's a very unlikely scenario right now that the key waterway that Iran is onIran's border could could be shut. But that is a waterway that that has 30%of global oil trade, as well as 20% of liquefied natural gas.If that were to close or supplies through, there would be disrupted.That would be a huge ratcheting up of pressure and see oil and gas pricesspike.

But again, that is still a remotescenario, but it is sort of the worst case scenario that the market isobviously anxious about. But it does seem that right now tensionin Middle East is something that they're watching.Stephen. Overall, though, are we looking at oilmarkets tightening? Yeah.I mean, I think if you if you look at where we are with there is beyond theconflict in the Middle East, we are in a a tighter market than we were monthsback. There are some analysts saying thatwe're in a deficit now.

Could we rise towards $100?You know, Goldman had a note out this morning saying that $90, Brent, is sortof the ceiling right now.But it really depends on who you ask. Everyone kind of has a differentdifferent look at it. But OPEC plus has tighten the market bycutting barrels from the market through through the next few months, through theend of the second quarter. How they're going to respond going intothe third quarter and fourth quarter was going to be something that's going to beclosely watched because they could add supply and help add some cushion towhere we are.

So certainly there is a there arefundamentals backing up oil's move higher over the last few months,especially since the start of the year as we've seen oil track towards the 90$100 level. But today, speaking specifically abouttoday, it's clearly driven by folks watching the the Israel's retaliation toIran and the explosions in Iran and how to kind of digest that to see whathappens next. Is Iran going to respond again or isthis the end of it? Stephen Jones, senior energy reporter,thank you so much for that. Let's stay with energy markets and getmore perspective forward in Fisher.

Rockey, founder and chairman of MGE,which is an international energy consultancy.Good to have you with us. How are you reading the resurgence interms of risk in the Middle East? Well, we have to separate the short termpolitical risk from the fundamentals. The fundamentals are still very strong.If there was nothing no, no political risk added, the prices would rise to 95,98, maybe $100. The second half of the year.And then Opec+ has to decide, can we shall we put some volume in or shall wejust wait? If they don't put any volume in there,the prices will hit $100 a barrel.

Political risks four or $5.There is no big political risk in this market because OPEC+ has 6 millionbarrels capacity and everybody knows if the supplies are cut, it's overnight.They can increase their volumes and make up the difference.When we talk about risk, some are looking at the Straits of Hormuz, asStephen said Chomsky was talking about earlier.How are you assessing the risk of a closure?I'm sorry, this is a nonsense question because people think that the Strait ofHormuz is a one way street, that only oil goes out.80% of the food in Iran comes in through.

The Strait of Hormuz.You're close to the Strait of Hormuz. You starve the people inside of Iran.So it may be something for a few days, maybe one week as a sort of a, uh,shortening of show of force. But it cannot be closed because theIranian population will starve without the Strait of Hormuz if it happens,because some people say it might happen if it happens.How am I to affect the markets? How will this play out?If it happens, it can increase the price prices $23 a barrel.But still it is a lot of spare capacity. And at that time, all the sanctionsagainst Russia needs to be suspended.

Because we need the Russian or Russianoil is actually capacity to export is not bigger than the pre sanctions,period. So you have to open the hands and thenVenezuela and a lot of other people. But the possibility is really one in10,000. We talked about possibly a tighteningmarket. How are you assessing that in relationto perhaps demand from China? China's economy is beginning to recoverand it may demand more oil on the back of that.But Chinese oil demand grew by 1.6 million barrels per day last year.This year is only 400,000.

Chinese oil demand will peak by 2027, soclose by. And this is a very big change in theglobal market because the world has been waiting for China to come in and rescuethe market. Whenever that is an issue, that role isgoing to cease. The Chinese will be for the next 20years. They controlled the global demand, butthey're having massive consumption. They're going to do the same role withLNG for the next 20 years. But oil up to is going to be closed.We know that the US House of Representatives looking at a legislationbanning China from buying Iranian oil,.

What impact might that have?Well, Chinese statistics show that there is zero Iranian oil imported, butimports from Malaysia is one 1 million barrels per day.Although Malaysia only produces 400,000 barrels of oil, imports from Oman arebigger than the Toyota only production. This is all Iranian oil renamed.And the Biden administration has deliberately turned a blind eye.And as long as Biden is in the office, I don't think there will be any change.And in terms of us looking at re-imposing sanctions as well asrestrictions on Venezuela, would that have a major impact?Venezuela is irrelevant.

The sanctions are low, sanctions, maybe200,000 barrels per day difference. Venezuelan oil industry is destroyed byMr. Chavez and Mr.Maduro. It could be 5 to 10 years of safetymanagement to bring them back to 3 million -50.But at the moment is all a matter of a couple of hundred thousand.So that will not cause prices to high.But Iran, Iran, their Iranian oil production is almost near capacity.So if either we wait for President Trump to come in there and impose realsanctions that he put in place, or if.

Some way trump dramatic change, the USchanges policy, the Iranian production will go down by a million and a halfthousand barrels per day, which the Saudis will make it overnight.Sarah Dunn. We know that Opec+ has extended that lidon production. How much longer do you think that willpersist, given that Saudi Arabia actually needs oil at 100 bucks a barrelto balance its budget? I don't believe in the numbers of thebaby. It's so much the Saudis, they manage thesystem very well. Basically in the Middle East.The more money you have, the more money.

You spend.If you have less that, you will be more careful.So I think that is to say that they need $100.No, everybody needs more money, but they can manage it far less.And they have been I mean, if you visited the country, the country hasjust been so dramatically changed. Everything is so dramatically changed.So a lot more flexibility did. And the financial analysts give itcredit, too. We know you have great insights into theenergy sector, energy space and market. Is this something that perhaps tradersand the rest of the world isn't quite.

Understanding when it comes to theenergy market? What what what are we missing out on?I think the fundamentals and the prices are disconnected.Why does prices your prices go to $83 then is $5 maybethis premium in the price today? But why is it their fundamentals are sostrong? We are going to go higher prices and ifwe have some. Minor change because of geopolitics, itwould be correct to self corrected by itself.We are going to 90 $500 and the key thing to look for is that is opec+ goingto two under 50, 500,000, maybe even a.

Million barrels per day or not in thesecond in the third or fourth quarter of the year, not in the second quarter.And I think they will do it because if they don't do it, prices will go above$100. Ferdinand, thank you so much for joiningus today. Sergeant Fish, Iraqi oil.Keep an eye on Opec+ in the coming quarters.Still to come, the world's biggest election gets underway in India.We'll get the insights of Ananta Aspen Seat Centre CEO on what's at stake inthe six week voting exercise. Keep it here with us.This is live.

And. Welcome back to Bloomberg Markets Asia.You're watching India Focus. India starts trading in under 2 minutesand futures pointing to a lower open Sensex down 7/10 of 1%.Keep a very close eye on oil prices. This is one market that imports most ofits oil needs. Oil, of course, trading above that 90bucks a barrel, reversing losses today, jumping more than 3%.Again, all the benchmarks in India pointing to a lower open.We're keeping an watch on Infosys and of course, Brent crude on the back of that,Infosys falling 2.4% in pre-market.

Trading.Let's stay with India, head back to Chennai for the start of India'selections and Bloomberg's Monika Doshi is there.America Tensions in the Middle East sending oil prices higher.Will higher fuel prices be a challenge for the economy?Undoubtedly there will be hassle. And as you pointed out, India is a verylarge importer of crude oil. And we've seen the various tactics thatthe country had to deploy to be able to meet its oil requirements.When the Ukraine war broke out and sanctions were imposed on Russia.Now, you know, I must say that as the.

Election gets under way in India and,you know, there are six more phases, this is going to go on all the waythrough June 1st. It's very difficult to tell what theMiddle East situation will be. Well, let me put it this way to you,that the more fragile this world looks to Indian voters, the more they're goingto seek, you know, a strong leader. And we do know that those are qualitiesor attributes they seem to have identified with Prime Minister Modi.And, Mallika, we know that India has relations with both Iran and Israel.How might this play out in terms of the thinking in India?Well, I do know we've called in the past.

Week for de-escalation of the crisis inthe Middle East after we saw the Iran strikes.Unfortunately, I have not been able to reach out and find out what thegovernment's comments are this morning because I've been parked here inChennai. But I'm sure they will be looking at thesituation in two ways. One is, of course, the geopoliticalfallout. And the other is the economic fallout onthe economy here in India. And I'm going to wrap by saying thisquickly. We may not see any immediatetransmission of higher oil prices to.

Voters or citizens because Indiangovernment oil companies tend to not move prices higher if they feel the moodis not welcoming. That's the most diplomatically I can putit. So it does seem as though will nottranslate into a more expensive commodity in India, at least over thenext few weeks. But that depends on whether it stayssouthward a 100 or rises above that. Well put.Monica, thank you so much for that lunchbox.Monica Doshi in Chennai. And we have a headline to tell you aboutfrom the New York Times, suggesting that.

Iran officials are saying the strike hitits military airbase near Esfahan. And this is as reported by The New YorkTimes. It says that Iran officials have saidthat the strike has hit military airbase near Esfahan.Now, let's find out what Middle East tensions and high oil could mean forIndia's foreign policy. Joining us from New Delhi is IndraniBagchi, CEO of Ananta Aspen Center, which is a think tank and research groupon international relations as well as public policy.Good to have you with us. I'm just wondering, put this inperspective for us.

This Middle East conflict and what thatmay mean for India. Well,as you said a little earlier, Israel is a very close partner of India.Iran is a traditional partner of India. We do no longer buy oil from Iran as aresult of the sanctions. But anyinstability in that part of the world will impact India very much because wehave as you know, we have about 9 million Indians living and working inthe Gulf. That by itself makes any geopoliticaltensions become a source of political and economic tension in India.That's a part.

India has invested deeply in its foreignpolicy in the Gulf, particularly with Saudi Arabia.Is Israel and the UAE all of these nations right now will befocusing are focusing on the Israel Iran strikes.And we've seen the results of the strikes this morning.All of these will have an impact on how India sees the region becauseinstability is not something India is very comfortable with.I don't know if you have followed this, but after the Israel strikes on Iran,after the Iranian strikes on Israel last weekend, Iran seizeda ship, a merchant ship, the MSI Aries,.

With 17 Indian crewmen in it.And this has been held hostage by Iran for the last one week.They released one woman crew member this morning.But that's another thing that adds to India's troubles, because, you know,there are Indians have to be evacuated from troubled spots all over the world.So you would say that India has adopted the right foreign policy in the MiddleEast to ensure its oil supplies. Well, see, the thing is, oil suppliesare still a factor of market forces. We buy oil from Saudi Arabia, Iraq,Russia. These are our top oil sources.I don't think any of them would be.

Affected by what is happening right now.I guess if there are connectivity issues, oh, did I forget to mentionthat, is that the US is become one of our biggest sources of natural gas aswell. But it is aconnectivity or connectivity problems in in this region will have an impact.But that but I mean we've been through the Russia Ukraine war andthe Indian government has kept prices stable.Energy stability or energy price stability is vital for the growth of theIndian economy. And you will see more of thatintervention by governments coming in as.

We go along.In Germany when it comes to relations between India and the US, how might itperhaps develop or deepen with a third term of a modi government?I think I think there is a degree of comfortbetween India and the US today that has not been there before, largely becauseof the emphasis on the US relationship by the Modi government for the pastdecade. But to be fair to the US, a reciprocalemphasis on relations with India by separate US administrations.And I think that we continue. Indra Nooyi, just tointerrupt you here, we have New York.

Times also saying that the Israeldefense officials has said that its military has struck Iran.New York Times saying that Israel defense officials have said it'smilitary did strike Iran. Of course, we had New York Times sayingearlier as well that Israel's military struck Iran, according to two Israeliofficials. We will continue to bring you thoseheadlines from The New York Times as we get them.In terms of foreign relations, China possibly is the toughest one.How how might aside Modi, Tom, define those relations with China?It is indeed the most difficult.

Relationshipfor all your viewers. There are 100,000 soldiers, troops oneither side in a face to face situation in the dark, which is a very, veryinhospitable part of the world. And that has been the case for the lastfour years. India has taken some of some steps tode-link or not to decouple its really its economy from China, particularly inthe area of investments by China in the technology sector and in the financialsector. China has not been a big FDI source inIndia because of security concerns in India.But certainly from Tick-Tock onwards.

There has been a determined move toseparate China from India. Yes.Yes. And we're going to have to leave itthere. Thank you so much for your thoughtstoday. Indrani, Banki, Ananta, Aspen Center.Plenty more ahead. This is Bloomberg. The New York Times reporting that Israeldefense officials say its military has struck Iran and will be continuing ourcoverage of the developing situation in the Middle East while they daybreakMiddle East and africa.

Anchor Vonnie Quinn joins us from Dubai.Vonnie, take us through the latest. Well, what we do know is that twoofficials have confirmed to Bloomberg News that there was a strike, thatIsrael launched a retaliatory strike on Iran after Iran's semi-official newsagency had reported that an explosion was heard in the city of Esfahan.Now, we know that the Esfahan Nuclear Technology Center is based outside thecity around 200 miles. Since then, we've learned that that siteis completely safe. That's a direct quotation from Iranianstate TV. So you saw this huge reaction in riskassets, a massive flight to safety.

That's come off the boil just a littlebit. Gold is back below 20 $400 an ounce.But we are still seeing that flight to safety in the likes of treasuries andthe dollar. And we will be continuing to follow allof this, all of these details as they come out.Of course, it's a very fluid situation, but it does appear that Iran isdownplaying it to an extent. We have television in Iran and othermedia suggesting that things are continuing as normal.We also know that Esfahan was one of the sites where the 13th attacks werelaunched from.

It is home to a military base.We have to leave it there and we'll take you through the markets.As Vonnie said, it's risk aversion. We're seeing pretty much Haven's gettingbeat up. That is it.From Bloomberg Markets Asia. This is Bloomberg.

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