Israel–Iran is 'not like the other conflicts' in the Middle East
US President Trump left the G7 Summit early for unspecified reasons as tensions between Israel and Iran continue to intensify. Pangaea Policy founder Terry Haines joins Morning Brief with Brad Smith to discuss the Middle East conflict and its impact on the market — in particular, oil prices (CL=F, BZ=F).
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
President Trump said his early departure from the G7 summit was due to much bigger things than a ceasefire between Israel and Iranian leadership. The comments come as Iran and Israel trade strikes for a fifth straight day. President Trump urged residents in Tehran to evacuate before it is too late. Here to discuss Terry Haynes, Pangaea Policy founder. Terry, you read words like "before it's too late" and "evacuate" coming from the US president. What is that signal to you about their and the involvement, the timing and the involvement, then that President Trump might be dialing up?
Well, that ought to be a very clear signal to markets that, you know, this conflict is not like the other conflicts. The markets are very used to, uh, looking at, uh, Middle Eastern, uh, conflict of a variety of kinds, whether it be the Gaza conflict, whether it be the trading of missiles that, uh, Israel and Iran did, uh, a few months ago and, uh, and saying, well, these are going to resolve pretty quickly and it's not going to fundamentally disturb, uh, what's going on here. Uh, but this one's not like the other ones. You know, what you've got here is you've got a situation where one party thinks that its existence is at stake and the other party thinks that the existence of its regime is, is at stake. Uh, and what that means is these things aren't going to stop anytime soon. Any, regardless of how you feel about Gaza, no one can deny, uh, the, the thoroughness of Israel's ability, uh, to, to reduce a particular region. And I think what the president is saying fundamentally is, you know, watch out because if you don't come to the negotiating table and actually come away with a deal pretty quickly, that's what you're going to be facing in, in Tehran.
And so the markets tend to try and price in whether or not there will be spillover effects. So it sounds like you're saying we should be anticipating some type of spillover.
Well, I think the, uh, the, the likelihood that this morphs into some kind of a general regional war, uh, is much greater than all the other, uh, all the other incidents that I talked about, uh, precisely because of that, uh, that existential, uh, that existential view on both sides. Uh, and, you know, and there's been a lot of talk about a lot of potential issues including Iran saying that they might close the Strait of Hormuz, uh, questions about whether other Gulf powers would be interested in, in helping or hurting that, uh, that particular effort. Uh, but there's, uh, you know, there's a substantial possibility. I wouldn't put it over 50% right now, but there's much more than a trailing risk that what you've got here is a situation that, uh, that spins into having a significant knock-on effects for the global economy, particularly energy.
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