US-Iran conflict: What next for oil and trade?

**Luke Wilson** (0:01)
Oil prices climb as the US and Iran trade strikes for the first time in weeks. It's World Business Express from the BBC World Service. I'm Luke Wilson. Passengers are left stranded as aviation workers in Kenya go on strike, and after 15 years Tim Cook gets ready to step down as the CEO of Apple.
There's been a fresh escalation in the war between the United States and Iran. US forces say they destroyed two Iranian launchers on a small island in the Strait of Hormuz, while Iranian state media says Tehran responded with strikes on two US-operated air bases in Jordan. There were also reports that an oil tanker hit mines and caught fire in the Strait. Jamshid Asadi is an economist and professor at the Burgundy School of Business in France.

**Jamshid Asadi** (0:51)
Kark Island handles the very vast majority of the oil that the Islamic Republic exports. So hitting it strikes directly at the cash machine of a regime which is in short of money. So it badly hits the lifeline of the regime because it is its most important sources of income.

**Luke Wilson** (1:20)
And what impact could it have on the wider global economy, do you think?

**Jamshid Asadi** (1:24)
Look, it certainly has bad impacts because it increases the prices of insurance, insurance policies, because it hits a bit more the oil supply, and, however, the Islamic Republic of Iran is trapped by its own policy a bit. How?
Because of the Hormuz, Detroit, what they did and because they defy, countries who need to sell and who need to buy oil have found other solutions. I'm not saying totally, completely, but they have thought of and they are working on it and they have found some other solutions. One example is China, who has always said, don't do that for, it's not good and so far. But now they use much more, they stock of oil rather than continuing to buy Iranian oil that is highly important for the Islamic Republic because they are in short of money and income and revenue.

**Luke Wilson** (2:38)
Economist Jamjid Ashai from the Burgundy School of Business. Walter Todd is President and Chief Investment Officer at Greenwood Capital in South Carolina. And Walter, what's happening with the oil price now?

**Walter Todd** (2:50)
Yes, we're seeing oil up about two and a half percent. You're looking at WTI between 85 and 86 a barrel and Brent between 90 and 91 You know, markets have largely looked through these flare ups recently, but we are seeing some spillover effects in the form of higher interest rates and lower equity prices here in the US.

**Luke Wilson** (3:06)
And elsewhere, Walter, Xi'an's IPO is set to launch in Hong Kong tomorrow, but we've had some early trading today.

**Walter Todd** (3:12)
Yeah, so in the gray market kind of pre-IPO, you've seen the stock down about 10 percent. This kind of a continuation of a fall in the valuation from down about 70 percent from its peak in 2022 It's really a result of the change in tariffs and import rules really impacting the profitability of their business model. So it could be a bumpy ride when they hit the market tomorrow.

**Luke Wilson** (3:31)
Walter Todd from Greenwood Capital, thank you.
Chinese Premier Xi Jinping and Russian President Vladimir Putin have held talks as they join the leaders of countries including India, Saudi Arabia and Iran at the Shanghai Cooperation Organisation in Kyrgyzstan. Earlier, I spoke to Zhou Lei, the Financial Times' Beijing Bureau Chief, and asked him how important this meeting is.

**Zhou Lei** (3:53)
For Xi Jinping, it's very important to project an image that there is an alternative world order out there, that China and Russia are friends and very close on the world stage. And this meeting tends to be the place where they like to display that unity.

**Luke Wilson** (4:08)
And it comes at a time for Xi Jinping where there are some warning lights flashing about the state of the Chinese economy.

**Zhou Lei** (4:15)
Yes, for Xi Jinping, the relationship is very important because Russia is a large importer of Chinese goods, but also Russia is a potential supplier of raw materials for China in case of any sort of contingencies. The Chinese economy isn't doing very well at the moment, and Xi does want to project an image of strength despite that economic slowdown.

**Luke Wilson** (4:36)
Yeah, and the US Treasury Secretary Scott Besson was telling Reuters yesterday that the world cannot have a China with a $1.2 trillion trade surplus. As you said, China needs these exports to help grow the economy, doesn't it? So this group of countries, probably even more important than they've ever been.