Hormuz whiplash is disrupting Iran talks & shipping logistics

[0:00] The state of our union is suffering from a bit of whiplash. [0:03] This morning, President Trump is renewing threats against Iran, [0:06] warning them on social media. [0:07] He's, quote, no more Mr. Nice Guy, [0:09] and vowing to blow up every bridge and power plant in Iran [0:13] if the country won't make the deal that the U.S. is offering. [0:16] We should note that targeting civilian infrastructure [0:18] is considered a war crime under the Geneva Conventions. [0:21] On Friday, President Trump suggested a deal was, in fact, close at hand. [0:24] He's still sending representatives to Islamabad, Pakistan, tomorrow [0:29] for talks with Iran. [0:30] This morning, Iran's top negotiator says the two sides remain far apart, [0:35] and the Islamic Revolutionary Guard commander says Iran is replenishing [0:39] its missile and drone stockpiles during this ceasefire [0:42] at a faster pace than they were doing before the war. [0:44] Meanwhile, despite Trump's optimistic pronouncements Friday, [0:48] the Strait of Hormuz right now remains not open. [0:51] Iranian gunboats are firing on tankers attempting to transit the strait. [0:54] It's a clear sign that nearly two months into this war, [0:56] Iran's stranglehold on the global economy remains as tight as ever. [1:01] Joining us now to discuss, Energy Secretary Chris Wright. [1:04] Thanks so much for being here, Secretary Wright. [1:05] We appreciate it. [1:06] You bet. [1:07] So, President Trump in the Truth Social Post this morning said, [1:09] if the Iranians don't take the deal being offered, [1:12] quote, the United States is going to knock out every single power plant [1:14] and every single bridge in Iran. [1:15] No more Mr. Nice Guy. [1:16] They'll come down fast. [1:17] They'll come down easy. [1:18] Are you not concerned that those proposed strikes on civilian infrastructure, [1:23] including power plants, would hurt the innocent people of Iran [1:26] and would constitute a war crime? [1:28] Yeah, look, the president's looking for maximum leverage, [1:31] maximum leverage in these negotiations. [1:35] A lot of their infrastructure supports only their war machine. [1:38] Of course, a lot of it supports civilians as well. [1:41] But no, I'm not worried about that. [1:43] Negotiations are going very well. [1:45] A lot of the chatter and noise you hear in public [1:47] is really the signs of a regime that's falling apart. [1:51] Different factions go in different directions. [1:54] They're worried about trying to get some leverage [1:56] at the end of these negotiations. [1:58] I think President Trump and Vice President Vance [2:00] have us on a pathway to a good ending of this conflict. [2:03] Both sides really seem to be dug down at this point. [2:07] Again, look, these things are fluid. [2:09] Things can change. [2:10] But to this point, what we've seen is the Strait of Hormuz remains closed, [2:15] as we understand. [2:17] U.S. has blockaded Iranian ports. [2:19] Do you believe the U.S. would consider lifting its blockade [2:23] in order for Iran to reopen the Strait? [2:25] Or I just wonder how you assess sort of the pieces [2:27] that each side seems to be employing right now [2:30] and the implications of easing in any direction on those positions. [2:35] I mean, Iran has got a big concession on it, President Trump. [2:37] They forced him to pressure Prime Minister Netanyahu, [2:41] who did not want a 10-day ceasefire, which started April 17. [2:45] It expires next Monday. [2:47] That's a big concession. [2:49] And Trump has enormous leverage over an Israeli prime minister [2:52] who's up for re-election, [2:53] probably when the government goes to term in October, [2:56] maybe sometime before. [2:58] I just think when the Iranians say they've opened the straits, [3:02] what that means is, and they've made it very clear, [3:04] number one, only commercial vessels, [3:06] number two, in prescribed transit lanes, [3:09] and number three, every tanker needs to seek the approval [3:13] of the Iranian Revolutionary Guard Corps Navy. [3:16] That's what opening the straits means. [3:18] So no doubt the president, under those circumstances, [3:21] is not going to remove the blockade. [3:23] But that, you know, demonstrating who's going to win or lose [3:26] on the straits is going to take us farther and farther away [3:30] from what has to happen. [3:32] The only thing that's going to end this war, [3:34] if it's going to end, [3:36] is an agreement on an Iranian nuclear agreement [3:40] that is plus or minus the one that Obama negotiated in 2015 [3:46] and the one President Trump walked out of in 2018. [3:51] That's what's on the table. [3:53] Yeah, the one he heavily criticized [3:54] when he first came into office and tore up, [3:57] and that may be where we end up now. [3:59] You know, I remember, again, [4:01] you correct me if I'm wrong here, [4:03] but based on one of your previous appearances, [4:05] I believe you said that you believed Iran [4:07] had the greater leverage in diplomatic negotiations [4:10] at that point. [4:11] I believe that was about a week or so ago. [4:14] Do you still believe that to be the case now? [4:16] Where do you assess sort of the side [4:17] starting this potential process here? [4:20] I mean, I know it's politically inconvenient [4:22] in Washington to admit, [4:24] but if the war ended tomorrow, Victor, [4:27] think about winners and losers. [4:28] The Iranian regime survived. [4:30] It's become a harder line. [4:32] The highly enriched uranium, they still have. [4:35] The ballistic missiles are not totally destroyed. [4:37] They're digging out their silos [4:39] in anticipation of another round. [4:41] And they've deployed geography in a terrifying way. [4:45] They can now, even if the straits are opened, [4:48] and you resolve this, [4:50] the Iranians have demonstrated [4:51] they can close the straits of Hormuz [4:53] any time that they want. [4:55] That was never the case. [4:57] And it is now. [4:59] Trump administration has cards as well. [5:01] Huge military. [5:03] And they have stuff that the Iranians want. [5:06] The real question in the end, Victor, [5:08] is whose capacity to absorb pain? [5:13] Who's got the higher or lower threshold [5:15] to absorb pain? [5:16] The Trump administration [5:17] or the IRGC running the country in Tehran? [5:23] And that question is only going to be answered, [5:26] I'm afraid, in the days and weeks ahead. [5:29] I want to bring in Gene Soroka. [5:30] He's the executive director [5:31] of the Port of Los Angeles. [5:33] And Gene, as I understand, [5:35] you're in China to meet with shippers, [5:36] exporters, and other port authorities. [5:39] That part of the world gets a lot more of its oil [5:41] that passes through the Strait of Hormuz. [5:43] And I just wonder, [5:44] what are you hearing from them [5:46] and those stakeholders right now? [5:49] Good evening, Omar. [5:51] Two real areas here, [5:52] the uncertainty and the conflicting information, [5:55] the stop-start that we've witnessed over the weekend [5:58] with respect to the Strait. [5:59] But I've been so heartened by the ports [6:02] and the supply chain partners here in North Asia [6:04] to keep the U.S. supply chain moving so fluidly, [6:08] even amidst all this concern that we have. [6:11] While vessel fuel prices doubled, [6:14] they're off their highs right now, [6:16] but supply is a concern. [6:19] Yeah. [6:19] And I just wonder, [6:20] are you seeing that shippers [6:22] are more discouraged right now? [6:25] Are they seeing this as a blip in the process? [6:27] How are they sort of approaching, [6:29] you know, sort of the whiplash [6:31] that we have seen to this point? [6:35] Well, it's been really difficult, Omar, [6:37] because we're now on day 51 [6:38] of this war with Iran. [6:41] And the concern of many of us, [6:43] including the shipping companies, [6:44] is the health and safety of their crews, [6:46] making sure they have enough food, water, and medicine [6:48] and can ride this out, [6:50] yet we don't know how long that's going to be. [6:53] And in our industry, [6:54] if a port is shut down, [6:57] it usually takes from that one day [6:59] about three days to catch up on all the scheduling. [7:02] So here we are now, [7:04] six weeks into this war and disruption [7:06] on the supply chain side, [7:08] this could take months on end [7:10] to get these ships back into a normal rotation. [7:13] And, you know, there's a lot of talk right now [7:15] about when the Strait of Hormuz actually gets open, [7:18] but the mere fact that it's potentially open one day [7:21] versus return to fully operational [7:23] are two very different things. [7:25] And you speak to these shippers all the time. [7:28] You're also making assessments as well. [7:29] But how long after any potential deal [7:33] would it take for things to go back to normal [7:36] in the sense that shippers trust [7:39] that the route that they will take will be safe? [7:44] This is the most important point. [7:46] And the companies that own and charter these ships [7:48] don't want to be the first one to try this. [7:51] Obviously, looking at safety and security of the crew, [7:55] first and foremost, the assets, the cargo, [7:57] but also those mines that were said [7:59] to have been put in that strait, [8:01] making sure that that is of safe priority, number one. [8:06] Also, we're not going to see a straight line [8:09] on this opening. [8:10] We never thought from an industry perspective [8:12] that there would just be a green light [8:14] and an all-go-forward. [8:15] This is going to be an iterative process [8:17] around a war zone with real concerns [8:20] after these ships have been sitting for so long. [8:24] You know, one of the things, [8:25] there's a lot being negotiated, [8:26] and we could see some more talks [8:28] coming up this week as well. [8:30] But one of the things that has been discussed [8:31] is Iran potentially imposing a toll on the strait. [8:35] And obviously, look, the shippers want safe passages, [8:40] but do you get the sense that they're making preparations [8:43] for that possibility? [8:45] I mean, how would they handle like a $2 million toll [8:48] for operations that previously obviously [8:51] did not have that consideration? [8:55] Around the world right now, Omar, [8:57] the scenario planning is wide and far [8:59] to make sure that companies stay ahead of the information [9:04] and with what they learn, [9:06] try to enable shorter-term tactics. [9:09] And if a toll is on the horizon, [9:12] it won't be a surprise to many in the industry. [9:14] A war-torn region is witnessing now [9:17] the opportunity to rebuild. [9:19] It will need money and finances to do that. [9:22] So that's a perspective that many have had. [9:24] And also, with the price of oil, [9:26] it's come down over the weekend by about 10%. [9:29] At these levels, those who are selling the oil [9:31] are bringing in that cash as well. [9:33] So that financial consideration for Iran [9:36] and the broader region will be front and center [9:39] to many of these shipping companies. [9:42] You know, earlier in the show, [9:43] we were talking about how airlines, [9:45] especially in the Europe region, [9:47] will start to have to make some hard decisions [9:49] in terms of jet fuel shortages [9:52] and concerns about jet fuel shortages [9:53] in the weeks and potentially months ahead. [9:56] The president has previously said [9:58] the strait isn't a problem for the United States. [10:00] And I remember the last time we spoke, [10:02] you told me you weren't seeing a significant impact [10:03] on the port of Los Angeles in particular. [10:06] Is that still the case? [10:07] And when does this impact the consumer [10:09] in the United States? [10:13] Omar, the cargo is flowing smoothly. [10:15] I've been really pleased with the on-time arrivals [10:18] and departures of the vessels. [10:20] But diesel prices are up 50% in Southern California. [10:25] And at our port, two-thirds of the cargo [10:27] moves in and out by truck. [10:29] Those truckers are having to absorb that early cost hike [10:31] and then pass it on to the import and export companies, [10:34] which will in turn push that towards the American consumer. [10:39] Gasoline prices at the pump are up 20%. [10:41] That also has an impact. [10:43] So while the cargo flow is good, [10:46] the costs are growing daily because of this war [10:49] and the squeeze on supply and global pricing.