World Awaits Iran’s Response, US Strike Damage Unclear, Oil Price Tops $80
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This is the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Monday the 23rd of June here in London. I'm Caroline Hepke. Coming up today, Iran warns all options for retaliation are on the table following US strikes on its nuclear facilities.

Questions grow over President Trump's claim that the attack totally obliterated Tehran's atomic programme. And crude spikes as two supertankers U-turn in the Strait of Hormuz and markets watch for signs of escalation. Let's start with a roundup of our top stories.

Unprecedented US airstrikes against Iran's nuclear facilities over the weekend have set traders and governments across the globe on edge. The large-scale American operation targeted nuclear facilities at Fordeu, Natanz and Isfahan. In a 37-hour operation that included 125 aircraft, submarine-launched Tomahawk missiles and the first combat

use of the U.S.'s 30,000-pound massive ordnance penetrator bombs. Iran's atomic energy agency described the U.S. strikes as a savage assault but pledged not to abandon its own nuclear work. And speaking yesterday, Iran's Foreign Minister Abbas Arachi said all options for a response are on the table.

The United States itself has now also opted for a dangerous military operation and aggression against the people of Iran. In doing so, the U.S. administration holds sole and full responsibility for the consequences of its actions, including the Islamic Republic of Iran's right to self-defense under the principles of the United Charter.

Those words from the Iranian foreign minister were followed by further comments from the country's ambassador to the UN. Amir Saeed Irrani told an emergency security council meeting that the timing, nature and scale of Tehran's response will be decided by its armed forces.

Well, the U.S. has warned all American citizens abroad to be wary of protests and travel disruption. The State Department issued a worldwide caution alert after the strikes, saying in a statement there is the potential for demonstrations against U.S. citizens and interests abroad. And on Fox News Sunday's Morning Futures program, U.S. Secretary of State Marco Rubio warned Iran against retaliation.

If they retaliate, it'll be the worst mistake they've ever made. Look, we can fly in and out of Iran at will. So it would be a terrible mistake if Iran retaliates. But that's not our goal. We are not declaring war on Iran. We're not looking for war on Iran. But if they attack us, then I think we have capabilities they haven't even seen yet. It would be a terrible mistake on their part. And frankly, it's not what we hope for or wish.

Marco Rubio's comments came as major U.S. cities tightened security following the U.S. strikes. While officials cited no credible threats at this time, police in New York, Washington, D.C., and Los Angeles have increased patrols at religious institutions, diplomatic facilities, and in public spaces.

When addressing the nation late on Saturday, US President Donald Trump said that Iran's key nuclear enrichment facilities have been completely and totally obliterated.

However, the effectiveness of the strike, dubbed Operation Midnight Hammer, appears to be less clear. When asked for more details on the success of the attacks during NBC's Meet the Press, the US Vice President J.D. Vance was less definitive in his assessment than President Trump.

He set the Iranian nuclear program back substantially last night. Whether it's years or beyond that, we know it's going to be a very long time before Iran can even build a nuclear weapon if they want to.

Vance's comments on Meet the Press came as US Air Force General Dan Kane told a press conference that the assessment of, quote, final battle damage will take some time. Satellite images taken on Sunday of the Fordow and Natanz sites show new craters and possibly collapsed tunnel entrances, but they do not offer conclusive evidence that the attack breached the underground facilities.

Now, adding to those comments, the Israeli Prime Minister Benjamin Netanyahu said that the U.S. airstrike delivered a great deal of damage, but the full extent is not yet known. Netanyahu made the remarks during a news conference in which he pledged to continue Israel's military campaign in both Iran and the Gaza Strip. Congratulations, President Trump.

Your bold decision to target Iran's nuclear facilities with the awesome and righteous might of the United States will change history.

Israel's Prime Minister Netanyahu speaking there as the UN nuclear inspectors from the IAEA have reported that they have not been able to verify the location of Iran's stockpile of near-bomb-grade uranium for more than a week. Iranian officials recently acknowledged breaking IAEA seals and moving the material to an undisclosed location.

Meanwhile, in a post on social media, the EU's top diplomat, Kaya Kalas, urged, quote, all sides to step back, return to the negotiating table and prevent further escalation, adding that Iran must not be allowed to develop a nuclear weapon.

Britain says that its military was not involved in the U.S. operation, but it expressed support for its results. U.K. officials said that they received advance warning from Washington about the strikes. Business Secretary Jonathan Reynolds says that Iran is a major threat to the U.K. and to the wider world, not just to the Middle East.

So the idea that this is just a benign, theocratic dictatorship keeping itself to itself, no. And there is simply no way a responsible British government would ever allow that country to possess nuclear weapons. I wanted a different way to obtain this, but I cannot pretend to you that the prevention of Iran having a nuclear weapon is anything other than the interests of this country.

Reynolds also pushed back on comparisons to the invasion of Iraq more than 20 years ago. President Trump's strikes have put the UK and other key US allies in a difficult position. They want to maintain key economic and military ties without being dragged into a war in the region.

Oil prices surged after the US struck Iran's nuclear site, stoking concerns of energy supply disruption. Global benchmark Brent crude rose as much as 5.7% to $81.40 the barrel before pairing those gains. Matt Gertzkin is chief geopolitical strategist at BCA Research. He told Bloomberg that prices could go even higher.

If Hormuz is closed or if shipping in other ways is blocked or if Saudi Arabia is hit, those are last gasp actions by Iran. But if they happen, then, of course, we would start to move toward maybe even a doubling of oil price. I mean, definitely over 100 per barrel. BCA researchers Matt Gertkin speaking there. The news comes as Bloomberg data showed two empty supertankers capable of transporting around two million barrels of crude were

U-turned in the Strait of Hormuz after the strikes, the vessels changed course on Sunday, sailing south away from the mouth of the Persian Gulf.

And global aviation is also facing increased disruption after the latest developments in the Middle East. That's after several American and European airlines paused flights to the UAE and Qatar. Bloomberg's Tiwa Adebayo has the details there. British Airways and Singapore Airlines have halted flights to the Persian Gulf as the industry adjusts to growing tension in the Middle East.

The UK-based carrier cancelled several trips to Dubai and diverted two planes bound for the Emirate overnight. That's according to data from Flightradar24.

Meanwhile, Singapore's national airline said it cancelled two flights to Dubai on Sunday, warning of more disruption as the situation remains, quote, fluid. The moves highlight growing concerns about an area of the region typically considered safe and sheltered from regional conflict. In London, Tiwa Adebayo, Bloomberg Radio.

So, those are our top stories. Let's get to the markets now. So, we mentioned that crude oil had surged at the beginning of trading on Monday. We've pared back some of that 6% gain. Brent crude futures at $77.87, the barrel up by 1.1%. Bloomberg Intelligence sees $100 oil amid greater volatility in the market.

if Tehran doesn't make peace with Israel. The dollar has also gapped higher. We're up four-tenths of 1% on the Bloomberg Dollar Spot Index this morning. Stock futures for Europe are sinking half of 1%. S&P 500 and E-Mini is also down two-tenths of 1% this morning. Gold, though, erased the gains that we saw earlier. We are now down three-tenths of 1%, $3,359. The euro is also softer. The Japanese yen down seven-tenths.

of 1% this morning. And Bitcoin currently trading at above $101,000, so up by 1.8%. As for the bond markets, 10-year U.S. yields up a basis point, only one basis point at 439. So those are the markets.

In a moment, we're going to bring you, of course, in-depth coverage of the geopolitical reaction to the US strikes in the Middle East. We will assess the impact on Iran's nuclear programme and also dig into the possible repercussions for the global energy market. But before we get to all of our correspondents and reporters on this very important matter,

morning. I want to bring you some of the in-depth thinking that has been done around what has happened this weekend. And I'd like to point you towards Bloomberg's Andreas Cluth. He's one of our opinion columnists talking about Midnight Hammer. It counts as a stunning triumph, but tactics are one thing, strategy is another. Cluth points out the dangers of hubris.

Who hasn't perhaps thought of that over this weekend? The ominous echoes, as Andreas mentions, of previous American presidents prematurely proclaiming mission accomplished. Is it mission accomplished here? You know, obviously, it doesn't seem to be that way. Mark Champion's also been writing in depth about whether actually the future now is in the hands of Iran's cleric.

President Trump claiming near magical powers for ending and preventing wars, according to Mark Champion. But Israel cornered the U.S. president into joining this war. So he talks about the various paths that he sees ahead. Is America going to be successful in this war? Will Iran's nuclear program be obliterated? What happens if there is...

or maybe regime change in Iran. So have a read of those two in-depth Bloomberg opinion pieces. They come highly recommended if you want more in-depth thinking on this story. For now, though, it is just over 24 hours since the US airstrikes on Iran's nuclear program. The Islamic Republic has warned of retaliation.

Brent oil has rallied as much as 5.7% at the open this morning, but we are at another hugely perilous moment. It would seem in the middle East. Joining me now is Bloomberg's EMEA news director, Rosalind Matheson. Ros, good morning. How successful firstly, do we think that these US strikes were on Fordow, Natanz and Isfahan? Surely that's the most important first thought. Well,

Well, and that is an important thought, but we don't really know. As you say, this was an extensive U.S. operation. The first confirmed use in combat of these bunker buster bombs called Massive Ordnance Penetrator Bombs seems to be an operation largely carried out by the U.S.

on its own without assistance from the UK, Europe and elsewhere. And the question is, did they actually achieve the goal? Donald Trump says they basically obliterated these sites that did damage deep underground in these key nuclear facilities. The reality is at this stage, we just don't know.

For now, the UN nuclear monitors are saying no one knows the condition of these facilities, particularly the Fordow facility.

facility. There's been no significant leak of radiation, obviously. And they don't know, most importantly, exactly where the highest enriched uranium of Iran is. It's quite possible they've been moving that around within their sites. That's more than 400 kilograms of uranium enriched to 60 percent. And they seem to have lost track of it. And so the question is, did this do damage enough to these sites to stop them being able to operate for a short period of time?

for a long period of time. Do they know where the uranium is? Has this meant that Iran is unable to accelerate if it wanted to the production of a nuclear weapon? It's very unclear at this point how much damage was done. And so therefore, was this operation truly successful if that was the singular goal? Indeed.

Now, Iran's allies like Hamas and Hezbollah are severely weakened, but Iran could disrupt oil supplies. It could retaliate. How and what is the expectation on retaliation? Well, obviously, Iran says they reserve the right to retaliate in whatever way they see fit. They haven't done anything significant so far. They're probably drawing breath and trying to work out how to calibrate a response. I mean, it's very clear they can't just let this

go by. This was the US striking directly at the heart of Iran. But equally, this is a regime that has suffered quite a lot of losses in its leadership, in its military, as you say, in some of its proxies, particularly Hezbollah, which was always at the top of

of the line for Iran. So what are the options? It can disrupt shipping again. The Houthis have warned they'll do that. It could close the Strait of Hormuz, which is a key waterway for the oil trade, although that would be quite self-defeating for Iran equally in terms of its own economy, which is already on its knees. That would have a big impact on global oil supply as well. It could try and attack US military sites

in the region and that just leads to an even bigger regional conflict. It can carry out cyber attacks. It's very good at doing those actually. So you could see some cyber action, but all of it is about saying what is the message that we can send if you're Iran that responds to this without possibly tipping it into an even bigger war. Mm-hmm.

Indeed. And to that point, what has been the reaction around the world to this? I mean, there's President Trump saying that Iran must make peace. Does this mean peace? Does it mean regime change? Or indeed, as one Trump ally called it, the Third World War?

What is the geopolitical reaction? Well, it's interesting to see quite a few countries obviously expressing concern about the situation, but not racing to support Iran, equally distancing themselves a bit from the US in all of this. Again, the UK, France, others saying we had nothing to do with these strikes. Countries in the region, the Gulf states, obviously very concerned about the potential for escalation, urging a return some way to talks, although that seems to be very difficult now.

at the moment. And in the end, what is it that Israel and the US want in this? As you say, people throw the words regime change around online.

all the time. Does Israel want that? Does the US want that? I mean, Donald Trump last night said in a tweet that if you, you know, if the current regime is unable to make Iran great again, why wouldn't there be regime change? That's even as other US officials are saying, hang on, we're not looking for that. It seems to be they're saying, well, if these circumstances create the environment for regime change at home with the Iranian people, then that's not

a bad thing. There's no sign the Iranian people are stepping away from the regime at the moment. There's probably more of a rally around the flag thing going on, even a regime that many Iranians don't like. But the question is, if you're pushing for that, for regime change, what would you be left with afterward? Because there are plenty of examples around the world where regime change has not gone particularly well.

No, indeed. Ros, thank you so much for being with us and for giving us your thoughts. Bloomberg's EMEA News Director, Roslyn Matheson. For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy. Giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs.

streamlining billing and payment and simplifying reporting. Easy Cater, your business tool for food. To learn more, visit easycater.com slash podcast.

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Well, I want to move straight on and talk about President Trump talking about this bullseye moment. But the United Nations atomic watchdog says that it sees no radioactive contamination. And as Roz was mentioning, it doesn't know where Iran's 400 kilograms of enriched uranium is right now. Jonathan Tyrone, who covers nuclear diplomacy for Bloomberg,

joins us now for more. Jonathan, good morning and thanks for your time. What do we know about Iran's nuclear program now, the capacity to make a bomb? Well, significant damage has been dealt to the future capacity of Iran to make new uranium. However, the bombing did not account for the inventory of existing uranium. We first reported five days ago that the IAEA had lost track

of the 409 kilograms of highly enriched uranium that's equivalent to 10 bombs worth of material that could be enriched to weapons grade.

We still don't know where that is and the success or failure of this military operation may well hinge on whether that can be safely accounted for. Because without doing that, the possibility is going to exist that Iran has a clandestine facility that we don't know about. And let me just quickly add, I mean, what just happened is like the proverbial person looking for their keys underneath the light pole bombing the light.

because we bombed the places where inspections were undergoing. We attacked the places where inspectors were. And just for context, nuclear proliferation has always taken place in clandestine locations, not declared locations under safeguards. So we have really entered new uncharted territory here. Yeah, India, Pakistan, North Korea all develop nuclear weapons. So

Well, even the US, I mean, the Manhattan Project was the greatest secrecy event in Western history, arguably. I mean, we developed the nuclear weapon that was tested in 1945 in secret. So I mean, this is how proliferation occurs, in secrecy. Not declared sites that are under international monitoring with monitors keeping gram level back of the solid material. And right now, we've disrupted that model.

Okay, yeah, although I don't know at the time of the Manhattan Project whether there would have been such a structure for international oversight, but Jonathan, you will know better than I. Look, in terms of the IAEA, they have talked about this window of opportunity now after what happened over the weekend. What do you make of that and what they're asking for? The IAEA is holding an emergency session of its board of governors today, and that will be the topic of conversation. Hmm.

Okay. In terms of the EU foreign ministers meeting today and also whether there's another path to diplomacy, what's your view? Look, Iran was attacked while it was engaged in diplomacy in blatant violation of the United Nations Charter. And it's going to be hard to reboot that at this stage. It's hard to see where...

reductive diplomacy takes place at this juncture, I think the best we can hope for is no further escalation. Okay, Jonathan, thank you so much for your time. Thank you for being with me. Jonathan Tyrone covers nuclear diplomacy for Bloomberg.

So my thanks to him. And in terms of the next stages, oil markets remain on edge. Brent crude opening almost 6% higher this morning. There are concerns about the Strait of Hormuz. Iran's parliament called for the waterway to be closed, according to Press TV, on Sunday. So joining us this morning is Stephen Stapchinsky, who leads our energy coverage in Asia. Stephen, good morning. The price of oil seems to be holding, at least it has retreated from that price.

high start at the start of trading. We're now trading at $77 a barrel. How concerned though are oil traders? I mean, there is certainly a concern, um, but there's a difference between, you know, are you concerned this, you know, there, there is a risk premium in the market. We're 10% higher than we were before Israel began the strikes about a week and a half ago. But then there's, are you concerned about the state of Hormuz actually being shut? And if they were actually concerned about that, according to Goldman and other banks, uh,

oil prices would be closer to $130 instead of about $77. So there is some concern, but I think it is still a remote risk for many in the market. I think immediately after the U.S. strike over the weekend, there were some fears exactly how Iran would respond. And maybe they would retaliate by hitting ships going through the Strait. Maybe they would try to actually shut it. But the only thing you have is a threat from Parliament.

which they've done before in the past. And it isn't parliament that decides who closes the strait. It's the supreme leader of Iran. It's the Security Council. You know, it is not them. So this seems to be more of a threat to see how the market will respond. And the market's not really responding if we're only up about like 1.3% today. Hmm.

So then I suppose, what are the risks? What could they do? And what are people on watch for? Because there are various efforts that could be made, you know, to close the Strait of Hormuz or make it impossible for commercial and oil tankers to actually pass. What do you think traders are now on watch for in the coming few hours and days?

I think, you know, one of the scenarios that I think a lot of the traders are looking for is a similar approach to the Red Sea where the Houthis were to target ships, right? So Iran or Tehran or organizations with connections to Iran could start to target individual ships with rockets, with mines, with other means, drones, to hit ships going through that are connected to the U.S., connected to Israel or Western allies.

That is a scenario that could slow down, increase charter rates, increase insurance rates, and make companies think twice before sending their ships through. It would interrupt trade, and it could be problematic. It wouldn't result in a total closure. Maybe it's impossible to totally close it.

but it would cause a disruption that would lead to higher prices. That is one scenario I think that the market is looking at. I think we're also closely looking at, as these tit-for-tat attacks continue, if the U.S. were to strike Iran again, then will they hit oil infrastructure? Will Iranian oil output be disrupted? That would have an immediate impact on the oil market. Likewise...

will Iran look to hit oil infrastructure elsewhere, maybe in Iraq or other places? That could also physically take barrels off the market, thus leading to higher prices. But clearly, as we're talking about, the Strait of Hormuz, which is the conduit for...

basically 20-30% of oil trade is the point that the market is closely watching because if that is affected, that has wide-ranging implications not just for oil but the global economy. Yeah. What do you think OPEC is going to be thinking at this point and doing? Obviously, OPEC including Russia, which is one of Iran's key allies. Yeah, I mean, how much more oil can they add into the market, right? So they've been

adding barrels back over the last few months. A lot in the market thought that this wasn't needed, it was kind of adding to the glut, but now we're in a situation where potentially you could have curb supply from Saudi Arabia because a lot of Saudi crude goes through the Strait of Hormuz as well as others.

maybe there will be other countries stepping up to fill the gap. Now, if you're taking 30% of seaborne crude trade off the market, OPEC Plus isn't able to come in and quickly replace all of that. But if we're talking delays, maybe some canceled shipments, that's a lot easier to digest and take if other OPEC members kind of step in.

So I think that's something that will be discussed, as well as just pressuring Iran and others to not close it. Because clearly they want Iran to have a measured approach here. And closing the Strait of Hormuz doesn't help anyone in the region.

This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple, Spotify and anywhere else you get your podcasts. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com.

Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa, play Bloomberg 1130. I'm Caroline Hepker. And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day, right here on Bloomberg Daybreak Europe.

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