Regional Instability and Future Outlook

NPR's newest podcast is where you can find NPR's biggest interviews I'm Stevevenskpe. The program is called Newsmakers. We talk with some of the most powerful and influential people of this moment Put real questions to them and push for real answers Follow newsmakers on the NVR app or any podcast player or you can watch on NPR's YouTube channel Hey there. It's the MPR Politics podcast. I'm Miles Parks. I cover voting I'm Mara Lyason, senior National political correspondent. and MPR business correspondent, Camila Dominosky is also here with us. Hi, Camila. Hello, hello. Hi. So we're recording this at one hundred three PM Eastern timeim on Monday, june fifteenth, twenty twenty six And today, there appears to be an agreement between the United States and Iran for a potential end to the war in the Middle East Leaders plan to sign this agreement in Geneva on Friday, and President Trump talked about the deal in France today where he is for the G seven meeting. Very importantly, the oil is plummeting down And the stock market is shhooting up like a rocket todayod, like record kind of numbers And the oil has taken its biggest plunge and we're into the load numbers, not quite back yet, Kevin, to the extent where we're getting closer to the numbers we were before it all started and the main thing is that Iran will not have a nuclear weapon. Samar, it's worth reitering here that this deal again is not final, but Trump also says the strait of Hormuz will be open again starting Friday. How much of a political win could this be for the president I think it is a very big short term political win. The most important thing for the president politically was to get the Strait of Hormuz open. This is something that was causing inflation in the United States and around the world. It was causing gas prices to go up. It was causing fertilizer prices to go up. The cost of food was going up. The war was extremely unpopular at home. And people were connecting the war in Iran with higher prices. So on that level, just in terms of domestic politics, this is a win for him because he gets to have a face saving off ramp from the war that he started that so far has not achieved his bigger goals. Well, Camilla, since this war began, I feel like most of your job or a lot of your job has been covering gas prices in this country. How have the oil markets responded to the news of a potentially open strait I mean, they were enthusiastic. For most of the conflict, prices have been above a hundred dollars hundred a barrel They were dropping in early June, largely out of expectations that the deal was coming. and then they have fallen further the very end of last week and then after the announcement on Sunday. Right now, Bnt crude, which is the global benchmark is right around eighty three dollars a barrel So that is down significantly from one hundred plus. It's still still quite a bit higher as Trump acknowledged there in that tape than it was pre war when we were looking at the sixties. Yeah, that's what I was going to ask, just how this all compares to where we were three months ago. Yeah, well, you know, this winter, the world was really oversupplied with oil. The world was producing more oil than it needed, supply outstripped demand. and that was keeping prices quite remarkably low. And that led to very low gasoline prices here in the US When the conflict began when Israel and the U.S. attacked Iran and the Strait of Hormuz shut to traffic, which was unprecedented. That had never happened before. world almost immediately lost access to about twenty percent of global oil production and liquefied natural gas trade Some of that oil was able to get redirected through other routes to get to markets, but it was still the largest disruption to oil supplies in history. And that is what pushed out prices so much. Got it. Mura As we're thinking about this, the strait potentially being open, obviously could potentially relieve a lot of these financial pressures. But when the United States started striking Iran a few months ago, there were a lot of other goals that the president mentioned. thingsings like potentially regime change early on was brought up before the strikes happened and then early on. And then I mean this idea of Iran being able to have a nuclear weapon How much do we know at this point about how the deal addresses these other goals other than opening the straight? We don't know a whole lot, although there's no indication any of those goals have been met by this agreement. And this agreement is a ceasefire agreement. It says hostilities will end while the two sides talk for sixty days about all the same issues that Trump said he went to war for, like stopping Iran from getting a nuclear weapon. L getting Iran to give up its store of enriched uranium to stop enriching any more uranium. regime change. Yesterday he said, As far as regime change, I never cared about regime change I mean, he's changed his goals as the war has become more frustrating to him And also we're hearing different messages from the Iranians. We have an Iranian statement that said that they were going to reopen the Strait of Hormuz if the US released twenty five billion dollars in frozen assets Well, Trump says they're not getting any money at all So lots of things are unclear And the other thing about Iran agreeing to never acquire a nuclear weapon, they have been agreeing to that for over fifty years. U So that is their official position. How exactly Trump plans to prevent them from acquiring a nuclear weapon is unclear. I also want to play out, I guess politically This means if gas prices do over time eventually go back down ahead of the midtermss, it's worth noting here, thousands of people have died as a result of this conflict, including more than a dozen U. S. service members. Do you think I guess, how do you think this war is going to impact Trump's legacy? outside of the gas prices question. Well, right now, just if you listen to experts who have studied this region and this intractable conflict for decades He comes out of this having weakened the United States giant superpower could not subdue Iran Iran's regime survived. That is a success right there for them uh, and He leaves them more or less with the ability to shut the straight again. Iran also issued a statement where they said that that the Strait of Hormuz will be open, but it will remain subject to Iranian arrangements. So they can do this again. This is a big weapon they never had. they never used at least to close the strait. So I think right now his legacy is sullied. He weakened the U. S. He strengthened Iran in the long term, even though he did degrade their military capabilities a lot So I think it really depends on how this these negotiations play out. rightight now looks like a blot on his legacy Camila, I guess looking ahead to the midterms, how likely is it that gas prices will go down again or to what degree will they go down before the midterms? Yeah. Well, it depends on what you're comparing them to. Over the past few weeks, gasoline prices in the US have trended down three straight weeks of falling prices were about fifty cents cheaper than they were at their peak And a lot of that is because oil markets were anticipating that a deal was coming and crude prices were dropping already And the current price would lead to gasoline prices dropping further still. That's the likely expectation. We just got a note from Patrick Deahan with the A gas buddy who follows this. He says if this holds, if the strait does open, if there's no resumption of conflict and these prices stay, then yes, that trend should continue and gasoline prices should keep going down Now if you compare again to before the war started, it's a different story, right? We're looking at a global oil system that needs to recover after this huge shock. That means production fields that were shut down need to restart. That means that refineries that were damaged need to be repaired. shhips need to get in and out of the Gulf, and then they need to travel around the world. And all of the stockpiles of crude oil that the world tapped into in order to make up for missing supply, well, countries are going to want to rebuild those stashes, including the U.S. And that's going to put upward pressure on demand. All those things mean higher oil prices for a period of time and that keeps upward pressure on gasoline prices. Not to mention it's summertime right now, which always means higher gas prices Well, let's take a quick break and more on this potential deal in just a moment You know, every day on U firstirst NPR's Golden Globe nominated Morning News podcast, we bring you three essential stories. At the heart of each story Our questions, what really happened? What really mattered What happens next At NPR, we stand for your right to be curious and to follow the facts. Follow up first wherever you get your podcasts and start your day knowing what matters and why This week on Shorewave, working from home is popular. No commute, sweatpants. People who do it say it makes them happier. And the data suggests they're probably wrong about that. On average, at least. We unpack a new study about the social isolation of remote work and what it means for your health This week on Shortwave, NPR science podcast, listen daily on the NPR app or wherever you get your podcasts Recently, cybersecurity researchers discovered a striking computer virus, seemingly related to the conflict between the US and Iran over Iran's nuclear program Everything about this thing screams special A cunning cyber weapon meant to gaslight nuclear scientists. it to plenty of money on the NPR app or wherever you get your podcasts. and we're back Samara, I want to get into how the world, how the US political system is all responding to this potential agreement, starting with here in the United States, specifically Republicans. I mean, have we heard from any other Republicans on how this deal is being met Well, we've heard from Lindsey Graham. He posted on X. I'm pleased to hear the memorandum of undernderstanding will allow the strait to be open. But he went on to say, I'm somewhat concerned that Iran's view of the agreement seems different than what the American negotiating team is claiming. He also said that any nuclear deal with Iran has to be sent to Congress But what's so interesting about that is the art of diplomacy is allowing both sides to claim victory. Both Iran and the U. S. needed a face saving off ramp. But if the two sides are too far apart and see this ceasefire agreement in diametrically opposed ways, it lessens the chance that these negotiations, which are now going to go on for sixty days can be successful. So I think you do have a group, a small group of Republican Iran hawks like Lindsey Graham in Congress looking at this. Israel, which is a player here, is very unhappy with this deal Up until now, they've been in lockstep with the U. S. on the goals. They thought that they were finally going to get rid of Hezbollah and the threat from the Iranian regime and they're being left Far short from that Um, so that's just that's something to watch for, but politically again I think that this is not going to cause a huge rift in the Republican Party. Most Republicans are thrilled that gas prices might be coming down. They want to win their reelection campaigns There's still so much that we don't know. and I think you're going to hear a small but pretty loud chorus that this agreement is pretty weak. Yeah, I feel like it's worth underlying over and over again that we have not seen text of what this agreement actually entails which is kind of significant. Yeah. is it fair to say that under the Trump presidency, the idea that something is said is happening, but it's not happening for a few more days There's still a level of skepticism, maybe that's warranted on what the deal is exactly like what is going to be agreed upon. Yeah. And don't forget that if you went through Trump's utterances and posts over the last couple of months, he has said they already agreed to not have a nuclear weapon many times. He has said that they already agreed to open the Strait ofform Ms many times. He said we won the war He said there's been regime change. So, you know, he is a master at declaring success with little evidence Yeah. And I will note that oil markets have repeatedly responded to headline after headline saying that a deal was imminent, right? We have seen prices drop like a rock over and over again. It's almost become kind of a meme, a joke in people who watch oil markets But you know, overall through this conflict, oil prices have not been as high as you would have expected based just on a description of what was happening with oil supplies. right? Because of China Partly because China was not using as much oil as people expected, whether that was bigger stockpiles than people knew, or that they were able to reduce demand more than expected. It's going to be really interesting to see which of those it was more oil sneaking out of the strait than people thought. And I think also there was a big disconnect Between the futures market, which is much more psychological and the physical market where you know, people were paying one hundred and fifty dollars a brel for crude oil in the Middle East. Not on the futures market, but for real barrels. So there was a degree of traders thinking that this was always about to end so soon. it could end at any minute and that was kind of keeping a lid on B. I feel like you're kind of alluding to something which I was going to get to here, Camillo, which is that we talk a lot about oil prices, but the effect of this war have been broader than just that on the global economy. Have we seen anything else broadly in terms of just in the time since this agreement was announced, in terms of how the broader economy is responding Well, certainly, we've seen stock markets also are up, right? So enthusiastic response If the straight does resume something like normal traffic, it will be a huge deal to economies, especially in Asia that have dealt with a very material disruption in fuel supplies, which is really, really affecting them. Europe too it's affecting economic growth It's also inflationary, the higher price of fuel drives up costs for almost everything else in the economy, because transporting things and creating things and farming things and building things, that all of that costs more money all of a sudden. So this was an inflationary pressure that was being felt in the US where inflation just tooppped four percent for the first time in several years similarly in China. So it was a it's a big deal if it happens, if this time. and comppared to the previous times, we should note there is now an indication it's not just Trump saying there is a deal, right? We have both sides and the negotiators saying that there is some kind of a deal even if we don't know what it is. But if that does materialize, it is a huge relief to a global economy that had been deeply concerned. about what the consequences would be if oil supplies kept being so disrupted as the world's stockpiles of oil dwindles Well, I'm really interested also Mar and how this deal is playing out in the region there, because this war has been incredibly destabilizing for the entire Middle East in Lebanon, specifically. Israel has been fighting Hezbollah, the Iran backed militia. Thousands have been killed there. Plus about a fifth of Lebanon's population has been displaced So this relationship between Trump and Israel's leader, Benjamin Netanyahu seems pretty key here. What can you say about how this agreement is playing out there or how that relationship is playing into all this Well, Israel is extremely unhappy about this, and this is not what BB Netanyahu thought he had gotten Trump to agree to. For a while, they were walking in lockstep And all of a sudden, Israel feels that Trump has pulled the rug out from under them because they weren't finished. destroying Hezbollah and they wanted the Iranian regime to be much more degraded than it than it has been I think and Trump has used some of his harshest language for Bbi Netanyahu, who was one of his closest allies and friends globally and he's warned him not to bomb Lebanon anymore. and Bah who went ahead and did it. So I think it's frayed that relationship And I think politically, it probably is much more meaningful domestically in Israel than it is in the United States in some ways, this Friday signing this agreement, assuming it happens is still just the beginning of this conflict coming to an end