How The Israel-Iran War Is Reordering the Middle East

Summary

WSJ What’s News: How The Israel-Iran War Is Reordering the Middle East
Release Date: June 26, 2025

In this episode of WSJ What’s News hosted by Alex Osola, a comprehensive analysis is provided on the multifaceted impacts of the ongoing Israel-Iran war on the geopolitical and economic landscape of the Middle East. The discussion, enriched with expert insights and notable quotes, delves into various interconnected topics beyond the central conflict, including the influence of oil companies in U.S. politics, significant shifts in media leadership, developments in cryptocurrency regulation, and proposed Republican spending cuts. Below is a detailed summary of the key segments covered in the episode.

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1. Influence of Oil Companies in President Trump's Second Term

Timestamp: [01:34] – [03:43]

Alex Osola introduces the segment by highlighting how oil companies have significantly influenced President Trump's second administration. The discussion centers around the oil industry's pushback against Europe's environmental regulations, specifically the Corporate Sustainability Due Diligence Directive.

Key Points:

• Corporate Sustainability Due Diligence Directive: Requires companies with over €450 million in European revenue to report carbon emissions for their operations and those of their suppliers. Non-compliance penalties can reach up to 5% of a company's net annual turnover.
• Oil Companies' Stance: Major oil firms like Exxon, Chevron, and Shell argue that the directive is overreaching, as it extends EU regulations to their global supply chains, irrespective of geographic location.
• Political Alliances: Oil executives have allied closely with the Trump administration, contrasting with other industries such as big tech and banking.

Notable Quotes:

• "Oil executives have been pretty influential so far in the second Trump administration, more so than in his first," explains Alexander Osipovich ([02:43]).

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2. Anna Wintour's Departure from American Vogue

Timestamp: [03:50] – [07:19]

The host announces the retirement of Anna Wintour, the iconic editor-in-chief of American Vogue, after an illustrious 37-year tenure. Wintour's influence extended beyond fashion, shaping cultural trends and inspiring characters in popular media.

Key Points:

• Legacy: Under Wintour's leadership, Vogue became a global cultural tastemaker with significant influence in the fashion industry.
• Future Roles: She will remain with Conde Nast as the global chief content officer and global editorial director of Vogue.
• Cultural Impact: Wintour's presence was a fixture in major fashion events and inspired Meryl Streep’s character in The Devil Wears Prada.

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3. US Stock Markets Performance

Timestamp: [03:50] – [04:54]

A brief overview of the U.S. stock market highlights is provided, noting significant gains driven by technology and financial sectors.

Key Points:

• Market Indices: The S&P 500 and Nasdaq were approaching new highs before slight retreats in afternoon trading.
• Performance Metrics: The S&P 500 rose by 0.8%, the Dow by 0.9%, and the Nasdaq closed roughly 1% higher.
• Legislative Impact: Recent Senate actions, such as passing the Genius Act, were also mentioned in relation to market movements.

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4. Genius Act and Its Impact on Stablecoins

Timestamp: [04:54] – [07:19]

The episode shifts focus to the Senate's passage of the Genius Act and its implications for stablecoin issuers, particularly Tether.

Key Points:

• Genius Act Provisions: Introduces stringent requirements for stablecoin issuers, including mandatory audits of annual financial statements and backing stablecoins with safe, conservative assets.
• Tether's Challenges: Currently, Tether holds reserves in diverse assets like Bitcoin and precious metals, which do not comply with the Act’s requirements.
• Potential Outcomes for Tether: Options include issuing a compliant U.S. version of Tether or withdrawing from the U.S. market entirely.
• Beneficiaries: Companies like Circle, which issue the USDC stablecoin, stand to benefit as they already align with regulatory expectations.

Notable Quotes:

• Colin Eaton remarks, "Stablecoins... need to be backed by very safe conservative assets... Tether has a lot of treasury bills, but it also has part of its reserves in things like bitcoin and precious metals," highlighting compliance issues ([05:06]).

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5. Impact of the Israel-Iran War on Middle East Realignment

Timestamp: [07:46] – [10:47]

The core segment of the podcast examines how the ongoing conflict between Israel and Iran is reshaping alliances and power dynamics in the Middle East.

Key Points:

• Military and Political Assertions: U.S. officials, including General Dan Kane and Defense Secretary Pete Hegseth, have maintained that U.S. strikes have significantly hindered Iran's nuclear capabilities. Conversely, Iranian Supreme Leader Ayatollah Ali Khamenei claims victory, asserting that the U.S. overstates its successes.

• Saudi Arabia's Shifting Calculus: Previously motivated to normalize relations with Israel to counter Iran, Saudi Arabia has reconsidered its stance due to reduced perceived threats from Iran and the high casualties from the conflict.

• Regional Realignment: The anticipated integration of Israel with several Arab nations has been disrupted. Iran's weakening position and Israel's fortified military capabilities have altered previous diplomatic efforts.

• Economic Focus of Gulf States: Saudi Arabia and the UAE prioritize domestic economic development over regional conflicts, aiming to maintain stability and avoid being drawn into further turmoil.

Notable Quotes:

• Stephen Kalin observes, "One of the driving motivations for Saudi Arabia to normalize with Israel was to deepen cooperation in countering Iran," noting the diminished threat perception ([08:55]).

• He further explains, "The Gulf has avoided most of [the region's] conflicts... but it doesn't want to get dragged into them," emphasizing the Gulf states' focus on economic stability ([10:11]).

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6. Republican Spending Cuts and Senate Ruling

Timestamp: [10:52] – [End]

The episode concludes with an update on the Republican Party's efforts to pass significant spending cuts through the fast-tracked budget process, which has encountered obstacles due to a ruling by the Senate parliamentarian.

Key Points:

• Legislative Hurdles: The Senate parliamentarian's decision complicates the GOP's plans to implement cuts to state provider taxes and Medicaid funding for undocumented immigrants, potentially totaling hundreds of billions of dollars.
• Timeline Challenges: The ruling makes it more difficult for Republicans to present their legislation to President Trump by the July 4th deadline.

Production Credits:

• The show is produced by Anthony Banci, with Michael Kosmides as the supervising producer and additional support from Colman Standifer.

Closing Remarks: Alex Osola wraps up the episode, indicating the continued coverage of global and political developments that influence markets and international relations.

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Conclusion

This episode of WSJ What’s News provides an in-depth exploration of how the Israel-Iran war is significantly altering the Middle Eastern geopolitical landscape, while also addressing related economic and political issues. From the influence of oil companies in U.S. administration policies to the regulatory challenges faced by stablecoin issuers, the podcast offers a nuanced understanding of the interconnectedness of global events and market dynamics.

Transcript

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[Alex Osola]

February 2024 through January 2025 how the war between Iran and Israel is realigning.

[Stephen Kalin]

The Middle East One of the driving motivations for Saudi Arabia to normalize with Israel was to deepen cooperation in countering Iran. That threat is much less intense for Saudi Arabia than it once was, and so that incentive is not as strong as it once was.

[Alex Osola]

Plus, oil companies are enlisting President Trump to push back against Europe's environment rules. And Anna Winter is ending her 37 year tenure as editor in chief of American Vogue. It's Thursday, June 26th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. Oil executives have enlisted President Trump in fights against climate rules across the U.S. now they have won his support in their effort to quash Europe's flagship environment rules. Colin Eaton writes about oil companies for the Journal and joins me now. Colin, what have the oil companies been pushing?

[Alexander Osipovich]

They're asking the president and his trade and economics team to use the trade negotiations to push for a full rollback of a law that's called the Corporate Sustainability Due Diligence Directive. It requires any company with over 450 million Euro in revenue in Europe to report their carbon emissions not only for their own operations, but also that of their suppliers. And if you're thinking about a global oil company like Exxon or Chevron or Shell, they have thousands of suppliers around the world. And the oil companies argue that this law is overreach because it requires no matter where those suppliers are, whether they're in Texas or Australia, that they're required to be subject to this EU regulation. And the penalties for non compliance can rise to as much as 5% of net annual turnover at the parent company levels.

[Alex Osola]

What does this tell us about the influence of oil companies in President Trump's second term?

[Alexander Osipovich]

Oil executives have been pretty influential so far in the second Trump administration, more so than in his first and I think part of that is because of a reaction to the Biden administration that was prioritizing electric vehicles over fossil fuels. And they've been more natural allies to the Trump administration than, say, big tech or banking and other industries. They have a lot of people in the administration. Chris Wright, the secretary of energy, he's former CEO of a hydraulic fracturing company called Liberty Energy, and former North Dakota Governor Doug Burgum, now secretary of Interior, are in charge of President Trump's energy dominance agenda. The idea being that the US Is going to push exports of natural gas and crude to more countries in bigger volumes.

[Alex Osola]

That was WSJ reporter Colin Eaton. Thanks, Colin.

[Alexander Osipovich]

Thank you.

[Alex Osola]

Anna Winter will be stepping down as editor in chief of the American edition of Vogue magazine after 37 years on the job. Winter ran day to day operations of the magazine and grew it into a cultural tastemaker in fashion with an impact far beyond its circulation numbers. She will retain position as Conde Nast's global chief content officer and global editorial director of Vogue. Her face was a staple in the front row of fashion shows around the world and she helped inspire Meryl Streep's character in the film the Devil Wears Prada. Major US Indexes were up today, driven by gains in shares of technology and financial companies. The S&P 500 and Nasdaq were both on track for new high watermarks before retreating slightly in afternoon trading. The S&P 500 rose 0.8%, the Dow ticked up 0.9%, and the Nasdaq closed about 1% higher. Last week, the Senate passed the Genius act, which aims to bring more oversight to stablecoins, digital tokens with a fixed price. You'd think that would be good news for Tether, the number one player in stablecoins.

[Alexander Osipovich]

But.

[Alex Osola]

But in fact, the bill brings a tough message for Tether and rules that might even get it in trouble. Journal reporter Alexander Osipovich is here with more. Alex, why is this bad news for Tether?

[Colin Eaton]

The legislation includes a number of requirements for stablecoin issuers that at this time right now, Tether does not appear to meet. A big one is that stablecoins, which are tokens that maintain a value of $1, need to be backed by very safe conservative assets, basically cash, short term treasuries and similar things that will hold their value even in the case of massive market volatility. Tether has a lot of treasury bills, but it also has part of its reserves in things like bitcoin and precious metals and other investments that it doesn't even identify. In addition to that Tether has for years resisted doing a full audit. It puts out these things called attestations, showing a snapshot of what's on its balance sheet at different times. But it doesn't put out the full financials that a public company in the US Needs to do. Under the Genius act, large stablecoin issuers would need to put out audited annual financial statements.

[Alex Osola]

So what can the company do about this?

[Colin Eaton]

Tether has floated the idea of putting out a locally issued U.S. version of tether that will be compliant with the Genius Act. It could also just pull out of the United States altogether. Recently it essentially gave up on the European Union after the EU put out some rules on stablecoins that it did not like. And that is actually a viable option for Tether because right now Tether's big business is actually in emerging markets.

[Alex Osola]

This legislation is obviously bad news for Tether, but are there other companies that do benefit from it?

[Colin Eaton]

The biggest example is Circle, which issues the USDC stablecoin. That's the second largest stablecoin after Tether. Circle has always kind of held itself out as more regulator friendly version of Tether. They recently went public on the New York Stock Exchange and they are expected to do well in a Genius act environment. Additionally, there are a number of other players, such as big banks and even retailers such as Amazon and Walmart that have explored doing something with stablecoins, according to reporting by my colleagues at the Wall Street Journal. And these types of players are definitely attracted by the fact that we will likely soon have a regulated environment for stablecoins.

[Alex Osola]

That was WSJ reporter Alexander Osipovich. Thanks, Alex.

[Colin Eaton]

Thanks for having me.

[Alex Osola]

Coming up, how the war between Iran and Israel is reordering the Middle East. That's the break.

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[Alex Osola]

The Chairman of the Joint Chiefs of Staff, General Dan Kane, said the US Began highly classified planning to destroy Iran's Fordo nuclear complex in 2009. That's virtually as soon as the Iranians began to build it. Meanwhile, Defense Secretary Pete Hegseth restated the Trump administration's assessment that US Strikes on Iran destroyed the country's nuclear program and chastised the press for reporting on an initial intelligence report that said the attacks had merely delayed Iran's nuclear efforts by a few months. Separately, in his first public comments since the Ceasefire. Iranian Supreme Leader Ayatollah Ali Khamenei claimed victory in the conflict, saying his nation had delivered a hard slap to America's face. And the US Was overstating the success of its attacks. The Middle east is undergoing a dramatic realignment, just not the one the U.S. and regional leaders had envisioned as little as two years ago. I'm joined now by WSJ foreign correspondent Stephen Kalin. So Stephen, before Hamas's attacks on Israel in 2023, Saudi Arabia was close to diplomatic recognition of Israel. How has the war between Israel and Iran changed that calculus for Saudi Arabia?

[Stephen Kalin]

The calculus shifted a bit with Israel's war in Gaza. The high level of casualties has created domestic issues for Saudi Arabia which has said that the war needs to stop before it could even consider normalization. The most recent war between Israel and Iran has added a new complication to that. One of the driving motivations for Saudi Arabia to normalize with Israel was to deepen cooperation in countering Iran. At this point over the past year, after Israel's war against Hezbollah in Lebanon and now against Iran directly, that threat is much less intense for Saudi Arabia than it once was. And so that incentive is not as strong as it once was.

[Alex Osola]

What does the new alignment of the region look like at this point in the conflict?

[Stephen Kalin]

Before October 7, there was a lot of talk about a realignment in the region which would have integrated Israel and a number of Arab countries. The wars really broke a lot of that at least paused a lot of that convers because Iran is greatly weakened and Israel's strength has grown quite a bit. It showed the extent of its capabilities and so in some ways it's inadvertently intimidated some of the Arab countries that it was trying to court.

[Alex Osola]

What could the economic impact be of these shifts?

[Stephen Kalin]

It's one of the most important factors in the minds of leaders in the Gulf right now. Saudi Arabia and the UAE in particular have been very clear in recent years that their main priority is their domestic economies and they don't want to be drawn back into another conflict. The Middle east has obviously been through decades of conflicts. The Gulf has avoided most of those. But it doesn't want to get dragged into them and it wants to. It's been focusing on ending conflicts around the region so that countries in the Gulf can focus on their own development.

[Alex Osola]

That was WSJ foreign correspondent Stephen Kalin. Thanks Stephen.

[Stephen Kalin]

Thanks for having me.

[Alex Osola]

Several of Republicans largest proposed spending cuts can't be done as written in the fast tracked budget process they are using to advance their mega bill. The ruling by the Senate parliamentarian, a nonpartisan adviser who rules on parliamentary rules and procedures, dealt a significant blow to the GOP's hopes of passing their plans quickly. The ruling impacts cuts to state provider taxes and Medicaid funding for undocumented immigrants and could amount to hundreds of billions of dollars. It makes it harder for Republicans to get their legislation on Trump's desk by July 4th. And that's what's news for this Thursday afternoon. Today's show is produced by Anthony Banci with supervising producer Michael Kosmides. Additional support by Colman Standifer. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.