Traders Warn of $100 Oil as Iran Conflict Rages On

Summary

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Bloomberg This Weekend: "Traders Warn of $100 Oil as Iran Conflict Rages On"

Date: March 7, 2026
Hosts: David Gura, Christina Ruffini, Lisa Mateo

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Episode Overview

This episode of “Bloomberg This Weekend” centers on the ongoing conflict in Iran and its ripple effects across global oil markets, geopolitics, and everyday life. The hosts and guests discuss the sharp spike in oil and gasoline prices, supply disruptions through the Strait of Hormuz, investors' and governments' emergency responses, as well as wider instability across the Middle East. The program features a mix of expert analysis, strategic insights, and on-the-ground reporting, providing listeners with a comprehensive understanding of the crisis and its broader implications.

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Key Discussion Points and Insights

1. Oil Market Turmoil: Global and Domestic Impacts

Segment Start: 02:32

• Michael McKee explains that markets initially presumed the conflict would be brief, but persistent fighting is spooking investors. Prolonged high energy prices threaten to slow U.S. growth and pose political threats to the current administration due to public frustration over rising costs.

  • "An oil problem can become an everything problem. But it's not like it was in the 1970s... It is less likely to be a recession in the United States... It's more of a political danger to the administration." (03:45, McKee)

• Global Adjustments:

  • Julian Lee details the logistical gridlock created by attacks and risks to tankers in the Strait of Hormuz—a critical artery for about 17–20 million barrels of oil per day and as much as 20% of LNG trade. With the Strait functionally closed, vast oil backlogs are forming, and Saudi Arabia’s Red Sea reroutes are insufficient.
  • "Since the beginning of March, virtually nothing has left. The straits are effectively closed. We've got about four days' worth of Saudi production still able to be shipped, but after that, there aren’t options without a solution." (04:43, Lee)

• Although the U.S. is less dependent on Middle Eastern oil, global prices mean supply shortages affect all countries.

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2. U.S. and International Policy Responses

Segment Start: 06:56

• Waiving Sanctions for Oil Imports:

  • An excerpt from White House Economic Adviser Kevin Hassett reveals the U.S. is willing to relax sanctions—particularly on Russian oil—to quickly boost supply and tamp down soaring prices. The administration retains a "whole flowchart of tools" for such crises.
  • "We're ready to move them as soon as we have to. But we're also very optimistic that we're going to be able to get this near term problem resolved relatively quickly." (07:10, Hassett)

• Impact on Russia, India, and China:

  • Julian Lee: The move is seen as a major win for Russia, letting it restore discounted sales to India and China and lessen price markdowns, bolstering Moscow as the principal short-term beneficiary of the Iran conflict.
  • "For Moscow it is a huge win. So far, they are the only clear winner out of a week of war in Iran... it allows [Russia] to boost sales to India and reduce the discounts offered." (09:14, Lee)

• Strategic Petroleum Reserve (SPR):

  • The administration is avoiding an SPR release due to its still-low levels and risk of running dry during a potentially prolonged disruption. Nontraditional interventions like buying oil futures have been debated but remain unlikely.
  • "It's always on the table because you have it. But it's less than half full ... so there's a concern that if you use that now, you will run dry too early in what might be a lengthy problem.” (10:53, McKee)

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3. Intelligence, Military Alliances, and Threats

Segment Start: 14:50

• Russia-Iran Intelligence Sharing:

  • New reports confirm Russia is handing satellite intelligence to Iran, including military locations. U.S. officials say they're aware and are actively countering such activities.
  • "We have the best intelligence in the world. We're aware of who's talking to who, why they're talking... how accurate that information might be." (15:19, Secretary Hegseth via Gura)

• Iran’s "Existential" Moment:

  • Becca Wasser underscores the mutual support between Russia and Iran, notably with drones, and expects Iran to request further assistance, including possibly from China.
  • "There is this alignment ... I expect we’ll see additional support being requested from Russia, possibly even China by Iran in the coming days." (16:01, Wasser)

• U.S. Resource Allocation Dilemma:

  • The U.S. can blunt some of this intelligence flow but must weigh if it’s the best use of limited covert resources, especially as Iran and U.S. forces prepare for a possible larger attack. (17:15, Wasser)

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4. Defense Manufacturing and Regional Military Calculus

Segment Start: 18:43

• U.S. Defense Ramp-Up:

  • Pentagon officials and defense executives (Lockheed, Northrop, RTX) have agreed to rapidly boost production of munitions, focusing on long-range precision weaponry critical for both the Iran conflict and possible future crises with China.
  • "Those are going to be some of the same ones that would be used in a China contingency in 2027 or beyond ... make sure there are adequate numbers to replenish and sustain if needed." (20:01, Sanders)

• Munitions Shortfalls and Global Readiness:

  • Despite official reassurances, there are signals (discussions with South Korea about redeploying batteries) that stockpiles may be stretched, but U.S. planners have factored China and long-term needs into operational estimates. (21:47, Sanders)

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5. Daily Life and Public Resilience Across the Region

Segment Start: 23:49

• On-the-Ground in Israel, Iran, and the Gulf:

  • Dan Williams, reporting from Jerusalem, provides a snapshot of civilian disruption:
    • Iran: “Total chaos,” regime collapse fears, intense bombardment.
    • Gulf States: Unprecedented disruptions, sheltering orders, aviation impacts.
    • Israel: Society more accustomed to conflict, but public life still restricted—though with hints of cautious reopening (schools, airports).
  • "They're facing the decapitation of a regime that’s controlled their lives for almost half a century, bombs falling intensively ... In the Gulf Arab countries ... major disruption for countries that assumed stability." (24:21, Williams)

• Potential Ground War in Lebanon:

  • Israel is preparing for possible ground offensives in southern Lebanon to neutralize Hezbollah, ordering civilian evacuations and framing action as forced by Lebanese inaction against Hezbollah.
  • "The Israelis are saying they have no territorial claims on Lebanon, but ... they will do the job themselves." (27:20, Williams)

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6. Policy Debate: Messaging, Endgame, and Off-Ramps

Segment Start: 30:15

• Mixed U.S. Messaging:

  • Victoria Coats and Jen Gavito discuss confusion surrounding U.S. war aims—whether operational success or regime change is the true goal.
  • "There is still a lot of mixed messaging ... suggestions that unconditional surrender, regime change actually remains on the table as an objective." (32:16, Gavito)

• Iran’s Capacity to Endure:

  • Iran’s missile supply is better understood and targeted; nuclear program remains a concern, with unaccounted enriched uranium increasing anxiety.
  • "We’re pretty well underway toward neutralizing that [missile] threat ... In terms of the nuclear program, that’s more of an open-ended question.” (34:05, Coats)

• Regional War Risks and Diplomatic Prospects:

  • While regional escalation is possible, Iran’s historical aversion to broad conflict and focus on proxy action may contain the crisis. There is cautious optimism about a diplomatic “off-ramp” should the U.S. define and communicate achievable objectives.
  • "There could be an off-ramp by which ... the administration, Israel, claim success in the weeks ahead. Again, if you continue to talk about regime changes, that changes that calculus." (37:05, Gavito)

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Notable Quotes & Memorable Moments

• “An oil problem can become an everything problem.” (03:43, Michael McKee)
• “Since the beginning of March, virtually nothing has left [the strait]. The straits are effectively closed.” (04:43, Julian Lee)
• “For Moscow it is a huge win. So far, they are the only clear winner out of a week of war in Iran.” (09:14, Julian Lee)
• “It’s less than half full … there’s a concern that if you use [the SPR] now, you will run dry too early.” (10:53, Michael McKee)
• “They're facing the decapitation of a regime that’s controlled their lives for almost half a century, bombs falling intensively.” (24:21, Dan Williams)
• "There is still a lot of mixed messaging ... suggestions that unconditional surrender, regime change actually remains on the table as an objective." (32:16, Jen Gavito)

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Key Timestamps for Important Segments

• 02:32 — Opening: Oil and market volatility
• 04:43 — The Strait of Hormuz: Tanker gridlock and global supply shocks
• 06:56 — U.S. policy tools: Sanctions, waivers, and reactions
• 10:53 — Strategic Petroleum Reserve dilemma
• 14:50 — Russia-Iran intelligence sharing and implications
• 18:43 — U.S. munitions production ramp-up
• 23:49 — Life in Israel, Iran, and the Gulf under fire
• 27:20 — Israel’s approach toward Lebanon and regional war
• 30:15 — U.S. objectives, mixed messaging, and potential diplomatic solutions

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Summary

The episode delivers a multilayered look at the global ramifications of the Iran conflict—from tanker standstills and surging energy costs to the geopolitical chess match between major powers and lived realities for civilians. Analysts warn of knock-on effects that could drive oil past $100 per barrel, stress the strategic maneuvering among the U.S., Russia, India, and China, and debate the path forward as policymakers attempt to define victory and avoid regional escalation. The tone is urgent, informed, at times skeptical of political messaging, and deeply concerned about both immediate and long-term outcomes.

Transcript

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Bloomberg Audio Studios Podcasts Radio News welcome to the Bloomberg this Weekend podcast with David Gura, Christina Raffini and Lisa Mateo. Thanks for joining us for today's selection of conversations from the show.

You can listen to our favorite discussions right here on the podcast, but also make sure to join us live every Saturday and Sunday morning starting at 7am Eastern.

[Michael McKee]

We're on Bloomberg Television Radio and the

[David Gura]

Bloomberg Business App bringing you unique takes and in depth interviews on news, politics, lifestyle and culture. We want to start with what a lot of people are talking about this morning and that's oil and gasoline prices. They're at levels we haven't seen in years. For more we are joined by Michael McKee, Bloomberg TV and radio's international economics and policy correspondent. And Julian Lee, an oil strategist for Bloomberg News News, excuse me, News, joining us out of London. Mike, I'm going to start with you since you're here on set with us. Thank you so much for coming in this early. All three major indexes all dropped about 1% as oil and gas surged. Tell us what's going on with the markets. What are investors looking at and where we think this might be going?

[Michael McKee]

Well, there's sort of a dividing line. Initially, people thought this was going to be very short. The other military engagements the president's involved us in have been very short. The longer it goes, the more concerned people get about what the impact on the economy is. And a lot of that has to do with how Americans are going to be feeling about the this conflict and whether or not they'll pull back on spending. And we've seen CEOs across the country because of tariffs sitting on their hands, not sure what to do. And this just prolongs that.

[David Gura]

And an oil problem can become an everything problem.

[Michael McKee]

An oil problem can become an everything problem. But it's not like it is in the was in the 1970s. And a lot of people have made that comparison. We're much less energy dependent. We use much less energy to an oil to for each output unit of output that we make these days. And so it is less likely to be a recession in the United States. We might see slower growth, but it's not as much of a danger as it would appear. It's more of a political danger to the administration because, of course, people hate the idea of rising gasoline prices.

[David Gura]

Julie, let's talk about how the global oil market is adjusting as a result of what's been happening here over the last few days. We'll talk about the US in just a moment. But looking at it globally, we've seen the startling images of how little traffic there is in the Strait of Hormuz. Heard about how some countries, including Saudi Arabia, are trying to reroute a lot of the oil they're producing. Just give us a broad look at the way in which the global energy industry is trying to change as a result of what's happening here.

[Julian Lee]

Well, I mean, historically about between 17 and 20 million barrels a day of oil goes through the Strait of Hormuz. About 15 to 20% of the world's liquefied natural gas also goes through the Strait of Hormuz. Since the beginning of March, virtually nothing has left. The straits are effectively closed. They're not physically closed. But threats of attacks and attacks that have been carried out on ships transiting the straits have created a situation where owners and crews and charterers don't want to take vessels through. That has left a real problem for both oil and gas. We did a survey the end of last week. There are about 75 supertankers inside in the Gulf. Almost 50 of those are full. Others are being used for long term storage or are related to the Iranian trade. We calculated there were just nine tankers that were empty. Each tanker can take about five hours worth of total Saudi production. So you know you've got about four days worth of Saudi production that can still be put onto tankers in the Gulf. And that's if nobody else produces anything. We've already seen reports that both Iraq and Kuwait are cutting back their production because their storage tanks on land are full and they don't have anywhere else to put the oil. Saudi Arabia, as you said, is diverting crude oil across to the Red Sea. But that route isn't sufficient to take all of its exports. So we have a backlog and oil isn't getting out. And while the west and the US in particular is much less dependent on Middle Eastern oil than it was back in the 1970s, the price is global. So if China and India can't get the oil that they need from the Middle east, they're going to try and get it from somewhere else. Prices are going to go up for everybody.

[David Gura]

You bring up India. I want to play a bit of tape here of Kevin Haas, the President's chief economic adviser. He was on Bloomberg TV yesterday after the jobs report came out and he was asked about the way that the White House is looking at the global energy market right now. Let's take a listen to what he had to say about what the White House is considering doing and indeed starting to do.

[Michael McKee]

The sanction waiver that Secretary Busset came out with is just one of many, many tools that we have ready. We've got a whole flowchart of tools to use depending on this or that, and we're ready to move them as soon as we have to. But we're also very optimistic that we're going to be able to get this near term problem resolved relatively quickly.

[David Gura]

Michael McKee, get us up to speed on what Kevin Hassett is talking about there. We heard from the Treasury Secretary this willingness to relax sanctions on Russia to get oil to India. He's indicated there might be an expansion of that in the days ahead. Talk a bit about the significance of that in light of the really robust sanctions that have been placed on Russia since the start of the war in Ukraine.

[Michael McKee]

Well, this is a bit of a good news for Russia in the sense that they can sell more oil. Now, the US And India had just reached a deal where India said it would no longer buy Russian crude and that would have crimped the Kremlin's ability to fund its Ukraine war. And now to keep prices down, the President's going to let India buy more oil. The other question that follows from that is will they let China buy more oil? Because they too are under the sanctions. So it's, it's a good thing for Russia. It doesn't really help the US that much because as Julian said, oil is a globally priced commodity. So we'll see if it has a major impact. But right now it's not. And we're in that phase of the war where for investors, for traders, you trade first and ask questions later. There's an emotional component to this of things are going up. So let's get ahead of that and then we can figure out what the actual outcome damage is going to be.

[David Gura]

Julian, my other question about this is had India and or China ever really stopped buying Russian oil? Because this is one of the issues, how to get them to stop. There was talk about secondary sanctions that they never really follow through with with any kind of effective capacity. Is this really going to make that much difference realistically or is this just kind of a diplomatic coup for Moscow?

[Julian Lee]

Well, I think for Moscow it is a huge win and so far they are the only clear winner out of a week of war in Iran. This does two things for Russia. It allows them to boost their sales to India. India had roughly halved its purchases of Russian crude since late last year when President Trump imposed these extra tariffs on India. China has really just skated over all of this. It continues to buy Russian oil. It stepped in to take most of what India wasn't taking over the last couple of months. But the, the big hit for Russia was that it had to offer ever deeper discounts in order to shift those barrels. What I think this waiver does is it allows it to boost its sales to India and it allows it to reduce the discounts that it has to offer against global benchmarks. So, you know, it's a win win for Moscow.

[David Gura]

Mike McKee, something else that Kevin Hassett was asked about was whether the US Would consider or is considering releasing oil from the Strategic Petroleum Reserve. There's a lot in it. They have been refilling it. What did he say about that. And walk us through the calculus of this administration as they, with some alarm, are looking at the midterms looming on the horizon here and seeing this really precipitous rise in prices over the last week.

Former Energy Secretary Moniz was on Bloomberg this week talking about their decision during that administration to release from that reserve. And even he was saying it's not always a good idea.

[Michael McKee]

Well, at this point, the administration feels it's not a good idea. Kevin Hassett said they're not considering it at the moment. It's always on the table because you have it. But it's less than half full because it hasn't been refilled from the Biden administration letting it go. So there's a concern that if you use that now, you will run dry too early in what might be a lengthy problem getting oil. So it's not likely to happen in the short term. But the administration is, David, as you suggest, sort of flailing about trying to find a way to mitigate the pain, mitigate the headlines. There was even some talk of the Treasury Department getting involved in buying oil futures, which would have been something that's never happened before. And of course, if the words unlimited liability mean anything to you, it could have put us in that situation where the US could lose billions and billions of dollars. So it isn't clear what their strategy is at this point because as we keep noting, gasoline prices keep going up and keep going up by record amounts each day.

[David Gura]

Our Michael McKee, international economics and policy correspondent, joining us on set here. We're going to come back with Mike in a bit. He was speaking to a lot of Fed officials over the course of the week. They, of course, taking note of the fact these energy prices are rising. Going to hear some sound from his interviews with a number of them a little bit later in the show. Our thanks to Julian Lee as well, oil strategist for Bloomberg News, based in London, joining us here on this Saturday. Julian, thanks to you as well. Stay with us for more on Bloomberg this weekend, right after this.

[Michael McKee]

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[Christina Raffini]

Once you've established that you have the talent, it's about the hang. It's the pleasure of hanging out with the people that you're with. You know, Rob and I was always a great hang. We would sit in kibbutz for hours and then eventually get around to the music. That's what I mostly think of when I think of him, the time together.

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Listen to the sixth Bureau from Bloomberg Podcasts starting on February 13th on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[David Gura]

Some new reporting this morning from the New York Times revealing Russia is sharing intelligence with Iran, including satellite imagery showing the location of warships and military personnel. Secretary of Defense Pete Hegseth told 60 Minutes that the US is aware of all intelligence sharing and is working to mitigate any risks. We have the best intelligence in the world. We're aware of who's talking to who, why they're talking to him, how accurate that information might be, how we factor that into our battle plans. Our CENTCOM commander, so we know what's going on.

[Christina Raffini]

And the president has an incredible knack

[David Gura]

at knowing how to mitigate those risks. And so the American people can rest assured their commander in chief is well aware of who's talking to who. And anything that shouldn't be happening, whether it's in public or back channeled, is

[Jen Gavito]

being confronted and confronted strongly.

[David Gura]

All right, we want to go now to retired Colonel Wayne Sanders. He is Bloomberg Intelligence senior defense analyst. And Becca Wasser, she's Bloomberg Economics Defense Lead. Becca, I want to start with you. Do we know? Okay, yes. The Russians are sharing intelligence with Iran. But it's unclear if they've actually used that intelligence yet or if they help them in strikes. Do we know how far this goes and how it's being utilized?

[Becca Wasser]

We don't know exactly how far it goes at this point in time, but right now it's worth putting this in a broader context. This is an existential fight for Iran. So they're going to seek help wherever it is that they can possibly find it. And they've had a great alignment with Russia, Russia over the past few years, in fact, Iranian produced drones, the shaheds, that we have seen them use to great effect in attacks on places like the Gulf states and US Bases throughout the region. They actually exported those to Russia and Russia has been using them in its own fight against Ukraine. So here there is this alignment and there's almost a sense of Iran trying to seek help because it needs it, but trying to get a little bit of what it is already provided to Russia. So I expect that we're going to see additional support being requested from Russia, possibly even China by Iran in the coming days.

[David Gura]

And Becca, you heard Secretary of Defense say we have the best intelligence of the world. We're aware of who's talking to who should be whom, but I'll move on from that. But what can the US do about it? Yes, they're aware of it, but how does the U.S. can the U.S. do stop this from happening?

[Becca Wasser]

Honestly, the U.S. probably can stop it from happening in some ways, but there's a question of is it worth doing? And yes, obviously trying to reduce Iran's ability to have a better targeting picture, to be able to be more accurate in its strikes would be something that's really important. And here there's a bunch of different ways where the US could do it depending on the ways in which this is intelligence being shared. If it's space based intelligence, there are ways to try and reduce Russia's ability to see a good picture and provide it to Iran. There's also ways to cut off some of those communications by Russia and Iran. But at the end of the day, it comes down to is that where the US wants to put the predominance of its effort? Does it need to potentially use some resources that once you use them, you can't really use them again because they are disabled, discoverable in certain ways. So it really depends on the prioritization that the White House and the Department of Defense have, and frankly the intelligence community has, or whether they're going to focus their efforts and their resources on other parts of the fight, particularly as President Trump has said that a big attack is coming and also some of the efforts to try and reduce the risk of to US Forces and allies and partners in the region that threat

[David Gura]

of a big attack coming in that post from the president this morning on Truth Social. Colonel, I want to go to you next. We've been talking about some of the themes for the interview that I did with Secretary of State Antony Blinken, former secretary of state, earlier this week. He talked about how determining factors here might be markets and munitions. And focusing on that munitions part, we had a meeting at the White House yesterday of executives from many big defense companies. The president said we concluded a very good meeting with them. We discuss production and production schedules. They've agreed to quadruple production of the exquisite class weaponry that we want to reach as rapidly as possible the highest levels of quantity. Want to ask you about that in a minute, but first let's play a little bit of tape here from retired General General Petraeus, who was on balance of power on Bloomberg television and radio yesterday.

[Michael McKee]

We're going to have to dramatically increase

[Christina Raffini]

our industrial capacity, by the way. We also have to transform our forces. We need to change our very concepts of war.

[Michael McKee]

We have to change our very doctrine and and then we have to dramatically change what it is that we're buying and also how we buy it. It needs to be updated constantly, not say a million of exactly this over the next four years.

[David Gura]

So, Colonel, let's focus on the munitions side of this. What was discussed at that meeting yesterday and how acute in your estimation the need is here for these defense companies to produce more at this moment as we enter the second week of this war.

[Christina Raffini]

Thanks so much for having me. You know, when you look at the main companies that they're looking at, here is really going to be the winners, Lockheed, Northrop and rtx, based off of the munitions they are providing. So these exquisite ones they're talking about includes JASSM missiles, LRASM PAC3 interceptors for air defense, the THAAD system as well as the Prism. Northrop, you've got solid rocket motors, boosters in their Sentinel missile program. And then RTX, you've got Tomahawks, Sidewinders and SM6s. Why do I say that is because there was already a big focus on critical munitions production ramp up. And now that they have all agreed to be able to do this, this becomes a really big piece because those are going to be some of the same ones that would be used in a China contingency in 2027 or beyond. So they want to make sure that they have adequate numbers to be able to sustain not only their stockpiles and replenish those, but then also make sure that if they're needed for any further parts of the Iran conflict, they can be. You heard Secretary Hexth earlier in the week talk about transitioning away from those exquisite standoff weapons and then moving into gravity fed. Gravity fed becomes very important because those don't need solid rocket motors. They don't need those as a gravity fed. And there's no electronic warfare to get in the way of these precision guided munitions from hitting their targets. And we have them in the tens of thousands and hundreds of thousands, as opposed to the numbers that you would have for these other long strike weapons problems.

[David Gura]

And Colonel, very quickly, before we have to go, there's a bit of a disconnect here because you the secretary saying we, we're fine. We have enough munitions, we can keep this going as long as we need to. And there's also reporting this week that the US Is talking to folks like South Korea about possibly redeploying batteries from there to this front. I'm wondering why they would need to do that and if that's even realistic.

[Christina Raffini]

I think as you move into this part of the fight, too, I think it also goes into some of the South Korean weapons systems, especially in air defense, do a great job and all that. They are lower and lower yields. Oh, if you can actually use those, why not use those and save those for contingencies. But I don't believe that the US Entered this fight going okay. We only have enough missiles for one week, two weeks, three weeks or even four weeks from a contingency perspective because that all went into the planning and war gaming before this decision was ever made. From the military side, they know they have China as a potential consideration for Taiwan unification in 2027. So all of that would have been part of that military calculation, military calculus that they do before they even entered this war.

[David Gura]

Colonel, thank you very much. That's Colonel Wayne Sanders joining us alongside Becca Wasser. Our colleagues here at Bloomberg, thank you very much for the time.

Stay with us for more on Bloomberg this weekend, right after this.

[Michael McKee]

Hi, it's Alec Baldwin. This season on my podcast, here's the thing, I'm speaking with more artists, policymakers and performers like composer Marc Shaiman.

[Christina Raffini]

Once you've established that you have the talent, it's about the hang. It's the pleasure of hanging out with the people that you're with. You know Rob and I was always a great hang. We would sit in kibbutz for hours and then eventually get around to the music. That's what I mostly think of when I think of him, the time together.

[Michael McKee]

Laughing Lawyer Robbie Kaplan the great gift

[Jen Gavito]

of being a lawyer is the ability to actually change things in our society in a way that very few people can. I mean, you can really make a difference to causes in the United States if you bring the right case at the right time. Marriage equality, yeah, Windsor's the perfect example.

[Michael McKee]

And journalist Chris Whipple. Every White House staffer, they work in a bubble called the West Wing and it's exponentially more so in the Trump White House. Listen to the new season of here's the thing on the iHeartRadio app or wherever you get your podcast guests.

[David Gura]

We're going to go now to Dan Williams, who is our Jerusalem reporter. Dan, we've talked a lot about what the situation is going on right now, but I also want to ask you for average everyday people, what is the level of disruption at this time? You mentioned you've been in and out of shelters in last the last days and weeks throughout the region. We talked to Lisa, we've heard about travel disruptions, just disruptions of the economies. How are people feeling about how this is going to impact them? Not just their security, but their lives for the weeks and hopefully not but possibly months to come.

[Dan Williams]

Indeed, well within Iran, obviously it's total chaos. They're facing the decapitation of a regime that's controlled or governed, ruled their lives for almost half a century, bombs falling intensively. Even by the accounts of the Americans and Israelis, this is war on an unprecedented scale. An aerial campaign for now. So the Iranian situation would be the most dire in the region. In Gulf Arab countries that have found themselves in the line of fire, a very unfamiliar disruption. They have had to a degree warning systems go to shelter orders that have helped them escape high casualties so far, but nonetheless major disruptions for countries that have really assumed that they could continue with a degree of comfort security guilt in existence based on the stability of financial markets, energy exports, the aviation hub that is Dubai Airport, etc. In Israel, the situation is rather different. Israelis are really accustomed to this reality going back decades, but certainly the last two and a half years of multi front war. It began with Gaza on October 7, 2023, quickly spread to some seven fronts including Iran previously. So Iranians sorry Israelis are weathered to these conditions. They understand what it means to have go to shel to orders. Their system of detection is actually sophisticated enough to home in on the specific areas that are under threat of being hit by those missiles. That spares other areas of the country unnecessary disruption. They can continue more or less with regular lives. Nonetheless, for the last week, schools have been closed, businesses have been closed, people have been discouraged from assembling in public, and Ben Gurion Airport, Israel's main gateway to the world, has been shut. However, on Thursday, that airport began cautiously taking in incoming flights for returning Israelis, Israelis who had been stranded abroad. And tomorrow, Sunday, they say they will resume some outgoing flights. And indeed, there's some talk potentially of officers resuming business as usual and even children going back to schools, albeit under precautionary conditions. So Israel inching back toward normalcy, while many in the Gulf are experiencing themselves really in the middle of this storm that they didn't anticipate and whose future they can't really predict.

[David Gura]

Dan, it's been hugely valuable to talk to you about Israel's strategy in this war. And of course, we've seen some incursions, some attacks on Lebanon. And I want to play a bit of sound here before I ask you a question that's from Israeli Defense Minister Israel Katz. Let's take a listen to what he had to say recently about Lebanon in the government of Lebanon. In Lebanon will pay a heavy price. If Nasrallah destroyed Lebanon, then Naim Qasim will also ruin it in this way, talking about the head of Hezbollah ruining Lebanon in a similar fashion, I'm curious, as we see Israel kind of going into Lebanon, concern or interest in Israel's kind of desire here to expand territory therein, how do you see the strategy vis a vis that country?

[Dan Williams]

Well, that is the second front of this war for Israel. It's fighting in equal volume both on the Lebanese and the Iranian fronts, to judge by official statements, certainly very extensive dispossession of Lebanese who've been dispossessed quite a few times during the last two and a half years of fighting, Israel effectively ordered out the entirety of southern Lebanon south of the Lutani River. That's about one tenth of the country's land space. Something like a 10th or 20% of the population have heeded it so far. We're talking about tens of thousands of people who fled northward for fear of what looks like a growing Israeli ground maneuver. Following a number of airstrikes, the Israelis appear set on moving ground forces into southern Lebanon. They're describing this as a necessary measure in order to finish off Hezbollah. But they're also saying, and as noted, comments that you aired just now that the Lebanese government actually undertook to do this last year in the summer. Lebanese government undertaking a resolution issued from Beirut to disarm Hezbollah, which is part of the Lebanese fabric after all, hopefully consensually, hopefully without any kind of bloody encounters. That has not happened so far. The Israelis are saying they have no territorial claims on Lebanon, but in the absence of internal action to remove the threat, they see from what is effectively the cats war for Iran in Lebanon, a neighbo country, they will do the job themselves. So we're seeing a growing presence potentially mounting to a full scale invasion of Lebanon. That hasn't happened yet, but it's not being ruled out by the Israelis. And it's certainly something that's being anticipated within Lebanon.

[Becca Wasser]

All right.

[David Gura]

Dan Williams, our Jerusalem reporter, thank you so much for your time this morning.

[Michael McKee]

Stay with us for more on Bloomberg

[David Gura]

this weekend, right after this.

[Michael McKee]

Hi, it's Alec Baldwin. This season on my podcast, here's the thing, I'm speaking with more artists, policymakers and performers.

[Christina Raffini]

Like composers, once you've established that you have the talent, it's about the hang. It's the pleasure of hanging out with the people that you're with. You know, Rob and I was always a great hang. We would sit in kibbutz for hours and then eventually get around to the music. That's what I mostly think of when I think of him, the time together.

[Michael McKee]

Laughing lawyer Robbie Kaplan.

[Jen Gavito]

The great gift of being a lawyer is the ability to actually change things in our society in a way that very few people can. You can really make a difference to causes in the United States if you bring the right case at the right time. Marriage equality, yeah, Windsor's the perfect example.

[Michael McKee]

And journalist Chris Whipple, every White House staffer, they work in a bubble called the West Wing. And it's exponentially more so in the Trump White House. Listen to the new season of here's the Thing on the I Heart Radio app or wherever you get your podcasts.

[David Gura]

We want to turn now to Victoria Coats. She's the former deputy national security adviser to President Trump. We also have Jen Gavito. She's a senior adviser at the Cohen Group and she was the acting principal deputy assistant secretary for near east affairs for President Biden. Thank you both so much for being with us. Victoria, I want to start with you because I'm wondering as you heard and listened or read, whichever your preferred method of communication was this morning, that true social tweet from President Trump this morning telegraphing to Iran that incoming fire, incoming fury is heading their way. What is your reaction to both the language itself and to that kind of strategy, saying openly this is what we're going to do, we're going to hit. What is the President trying to do with that messaging?

[Jen Gavito]

Well, I think the President justifiably has a great deal of confidence as we enter the second week of this war against Iran. I think we've been enormously successful in degrading their ability to fire off these ballistic missiles. Obviously they can still do it. We need to be mindful of that and of the drones. But our ability and that of our allies to intercept them has been pretty seamless. And I think he's also saying that with that kind of air superiority that we have demonstrated, we can now use non stealth aircraft to bomb Iran. So the tempo of the bombing will pick up. And so his message all along has been if you lay down your arms, if you sue for amnesty, you will be treated with respect, you will be part of the rebuilding of Iran. But if you don't, we're going to use overwhelming force. I think that was the message this morning.

[David Gura]

Genka Vito, I want to turn to you on this point. We've talked a lot over the course of the morning about the various rationales that we've heard from the President and from members of his administration as well. It was only yesterday we saw that post about unconditional surrender and now we see this post from the President today. Do you have a clearer sense on this Saturday morning of what the President's objectives here are? And what does that message from the President on Truth Social today tell you about his tack about his strategy going forward?

[Jen Gavito]

Thanks for having me. I think there is still a lot of mixed messaging coming out of this administration about what the objectives are. I think Victoria is absolutely right that if you, if you frame things in an operational sense, then the very positive messaging about what's been achieved makes sense. But there continue, including yesterday with the President's truth social post as well been suggestions that unconditional surrender, regime change actually remains on the table as an objective. And that is much different than the operational successes that we've seen. Something that would I think draw the United States and Israel into a much longer term open ended conflict with less quantifiable results, fewer metrics to, to measure success by. And so when I see these posts over the course of the last 24 hours, what it says to me is the administration has not yet settled on what exactly success is defined by.

[David Gura]

Victoria, I'm wondering. We've had a lot of talk about how the duration of this, how long it could go, whether or not Iran, one of the things that was in the negotiations to begin with was the supply of intermediate and short range missiles. And that was never really something Iran was willing to go on the table with. But it is still unclear to a lot of analysts how many of those Iran has, how long they can last in this conflict. Iran is now saying, you know, we're in it for the long haul. The US Is saying we are stocked up, we're ready to go. Do we have any idea what, what kind of capacity Iran has to continue fighting back at this tempo? And do we know what is your assessment of their nuclear program following those strikes from the US Last summer, after which the President said their program has been destroyed? Do we know if that's true and if they were able to rebuild before this recent round of attacks?

[Jen Gavito]

Well, I think we're learning a great deal more about their supplies of missiles. And we figured out that they've kept them in these so called underground missiles cities, which once you identify them are fairly easy to neutralize. And then you can just watch them. If they try to bring anything out, you can hit it. So I think with the missiles, we're pretty well underway toward neutralizing that threat. And that was one of the key metrics the President laid out at the beginning of the conflict, is that neutralizing those missiles and destroying their ability to rebuild them was critical in terms of the nuclear program. That's more of an open ended question. I think we did see increasing activity around Fordow, around Pickaxe Mountain. That's one of the things that I think got everyone's concerns up that they were moving towards weaponization of that nuclear program. We know there are 800 pounds of enriched uranium, some say 60%, some say closer to 80%. But either way, you can make a weapon out of that material and that is unaccounted for. Apparently the Iranians told Steve Witkoff and Jared Kushner they weren't willing to relinquish that. Again, that's something else that motivated this attack. So we have obviously the capacity the heavy bombers to take care of those facilities. I think that will be the next phase of this action will be to make sure that is truly destroyed.

[David Gura]

Victoria, let me ask you a question that's a variation of when I asked the former Secretary of State Antony Blinken this week. And that is when you were in the administration and gaming out what might happen if there were to be this kind of conflagration in Iran what did it look like as it spread regionally? And does it compare closely to what we're seeing right now? In other words, is the reaction commensurate with what you and your colleagues would have expected back in the first term?

[Jen Gavito]

Well, our approach was a little bit different in the first term because we were trying to manage this situation through the maximum pressure campaign, through the really devastating economic sanctions, which I think had they been giving a little bit more time, we're pretty close to pushing Iran to the brink. And certainly the economic distress you saw in Iran around Christmas, which motivated those popular demonstrations, I mean, that weakness still endures. It's now worse. They can't fix that. And so I'm a little bit less concerned about a broader regional war. Iran's experience with broader regional wars have not been positive. Primarily Iran, Iraq war. And since the 1980s, they've tended to rely on their regional proxies to attack rather than directly engaging in a regional war. So my guess is that's what they're trying to do now with Hezbollah. Interestingly, Hamas has been essentially silent in Gaza, perhaps speaking to the fact that they're pretty much in disarray. Same for the Houthis. So that's kind of an interesting development as well.

[David Gura]

And Jen, we've got about 30 seconds before we go, but I'm wondering if you see a diplomatic off ramp here and how you think the administration might be able to drive down it. Sure.

[Jen Gavito]

I think for all the reasons Victoria just laid out, there is plenty of operational success that's been achieved and will continue to be achieved through this campaign, particularly in limiting Iran's ability to project power outside of its own borders, which was one of the early objectives that was suggested. So, you know, I think there's a scenario by which you, you claim success in those areas, areas you acknowledge that wisdom and knowledge cannot, cannot be eliminated quite as easily. And you still have a very ideological regime in place that will likely continue to be in place. So, you know, this may not be the, the only long term solution, but I think that there could be an off ramp by which the, the administration, Israel, you know, claim success in the weeks ahead. Again, if you continue to talk about regime changes, that, that changes that calculus.

[David Gura]

All right, thank you so much. Jen Cavito, she's senior advisor at the Cohen Group and of course, former acting Principal Deputy Assistant Secretary for Near east affairs for the State Department. Victoria Coats, former National Deputy Secretary, adviser to President Trump and President Vice President Pence. Thanks for joining us on today's Bloomberg this weekend. Podcast. Don't forget to tune in live for the show every Saturday and Sunday morning morning starting at 7am Eastern.

We're on Bloomberg Television, Radio and the Bloomberg Business app, bringing you unique takes and in depth interviews on news, politics, lifestyle and culture.

[Michael McKee]

Hey, it's Alec Baldwin. This season on my podcast here's the Thing, I talked to composer Mark Shaiman.

[Christina Raffini]

It's about the hang. It's the pleasure of hanging out with the people that you're with. You know, Rob and I was always a great Hank.

[Michael McKee]

And journalist Chris Whipple. Every White House staffer, they work in a bubble called the West Wing. And it's exponentially more so in the Trump White House. Listen to the new season of here's the thing on the iHeartRadio app or wherever you get your podcasts.