Odd Lots: The Iran War’s Lasting Scars Across Asia

Sourced by podcast-ingest on 2026-06-17. Auto-transcribed via AssemblyAI (universal-2, en). Speakers identified by AssemblyAI Speaker Identification using the per-podcast host/regulars hints; the resulting label→name mapping is in the frontmatter. Duration: 20m. Episode page: https://omny.fm/shows/odd-lots/the-iran-war-s-lasting-scars-across-asia. Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/8a94442e-5a74-4fa2-8b8d-ae27003a8d6b/bd6581ca-5dff-41c1-b4c5-b46b01441d87/audio.mp3?utm_source=Podcast&in_playlist=982f5071-765c-403d-969d-ae27003a8d83.

Show notes (from RSS)

An interim deal to reopen the Strait of Hormuz offers relief, but Asia’s economic woes are far from over. Beyond the chokepoint, the conflict has forced long-lasting shifts in Asia’s food and energy flows.

On today’s Big Take Asia podcast, Oanh Ha joins Odd Lots co-hosts Tracy Alloway and Joe Weisenthal to discuss why Asia is reeling from the conflict and what the “new normal” looks like for global supply chains.

Only Bloomberg - Business News, Stock Markets, Finance, Breaking & World News subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlots

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Transcript

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Joe Weisenthal - 1: Bloomberg Audio Studios Podcasts Radio News we

F: begin the week with the US And Iran having reached an interim deal to end hostilities and reopen the Strait of Hormuz.

Joe Weisenthal - 1: You sent oil prices lower and sparked

G: a relief rally across Asian markets. Officials from both countries set to meet now in Switzerland on June 19, where

Tracy Alloway: the agreement will be formally Everyone has discovered from the past six years that these big one off, supposedly one off disruptions can happen with frequency.

Joe Weisenthal - 2: That's Bloomberg's Tracey Alloway. Tracy co hosts the Odd Lots podcast and she spends a lot of time looking at the long term impacts of geopolitics on the global economy.

Tracy Alloway: And so the lesson that everyone's been internalizing is that you need to build up stockpiles, you need to have independence in terms of your crucial supplies. You need to have additional capacity.

Joe Weisenthal - 2: And few places have shown the need for independence and extra capacity more clearly than in Asia over the past few months. After the US And Israel went to war with Iran, the Strait of Hormuz grounded to a halt, choking off supplies of virtually every major commodity, including one fifth of the world's oil.

I: But I think a lot of great things are going to happen in the Middle east right now, and very importantly, the oil is plummeting down.

Joe Weisenthal - 2: At the G7 summit in France, President Trump touted a deal the US reached with Iran's regime over the weekend, which he says will reopen the Strait of

I: Hormuz essentially Ships are starting to go out now. On Friday, it'll be completely opened.

Joe Weisenthal - 2: Across Asia, countries are welcoming the U S Iran peace deal that would help destabilize global energy prices and reopen a vital shipping route. But many are skeptical that will happen. And even if it does, for Asia, that shift might be too little, too late.

Joe Weisenthal - 1: There is this brewing but not yet impacting food issue that will arise in Southeast Asia specifically.

Joe Weisenthal - 2: That's Bloomberg's Joe Wiesenthal. He co hosts Odd Lots with Tracy.

Joe Weisenthal - 1: The closure of the Strait of Hormuz is going to create a food stress in much of the world during the next planting season. And if there's food stress, people will be buying food and not random manufactured goods in China come that time. And so there may be an element where China is choosing to reduce its imports so that its customers of manufacturers have more capacity come next year.

A: Foreign.

Joe Weisenthal - 2: Welcome to the Big Take Asia from Bloomberg News. I'm Wan Ha. Today I'm sitting down with my colleagues Tracy Alloway and Joe Wiesenthal, co hosts of Bloomberg's Odd Lots podcast. We recorded this conversation just before news broke that Iran and the US May have struck a deal to reopen the Strait of Hormuz. And as you'll hear, this discussion is arguably just as relevant now as when we taped it. While the reopening of the Strait would be a welcome relief, the structural shifts caused by the conflict have fundamentally changed businesses across Asia, and the resulting pressure on food and energy supplies and prices isn't going away anytime soon. On today's show, we dive into why Asia is feeling more economic pain from this conflict than Western nations, and what the new normal looks like for the region and the rest of the world. While the details of the proposed new deal between the US And Iran remain unclear, one thing is certain. War in Iran and the virtual closure of the Strait of Hormuz have effectively slapped a war tax on vital products, and it's impacted every corner of the global economy. You've probably felt the pinch in one way or another, but its effects haven't been distributed evenly. Wealthy countries like the US And Japan have opted to drain their stockpiles of crude oil. In other corners of the world, governments are turning to demand destruction by encouraging industries and consumers to use less. But that risks slowing economic growth and triggering recession. It's a glaring disparity, and Bloomberg's Tracey Alloway says it highlights a structural vulnerability.

Tracy Alloway: They're often poorer countries. They don't have as big stockpiles of oil inventory, and the one thing we've seen developed countries do across the world is really start to dig into those stockpiles and release barrels in order to, I guess, cushion the higher prices. And so for a poorer country, I think that's one of the reasons in Asia, you're seeing the government's really focused on demand destruction rather than propping up prices. So you've had, I think India was encouraging people not to go on flights. People are being urged not to drive to work, things like that. China is doing pretty much all the heavy lifting in terms of demand destruction or like the bulk of it. So I saw a JP Morgan estimate, I think, saying that demand for oil from China had fallen like 9%. I think that's 1.5 million barrels. Barrels a day.

F: It's huge.

Tracy Alloway: Yeah, it's a pretty big deal. And again, it stands in stark contrast to a lot of the developed nations like the US that are really digging into their stockpiles.

F: You know, I don't know if you guys have noticed in your time here, the prices at gas stations. Do you know how much gas in Hong Kong costs?

Joe Weisenthal - 1: No, no.

F: About 33 Hong Kong dollars per liter, which is its equivalent of about $16 per gallon.

Joe Weisenthal - 1: Wow. Right.

F: That's up about 15% since the Iran war began. And diesel prices have actually jumped like near 50%. And I wonder, how does this stack up to what we've seen in the US And I guess more importantly, how does that feed into inflationary pressures?

Joe Weisenthal - 1: I mean, if we had $16 gasoline in the US there would definitely be a revolution for sure. Clearly, inflation is trending up in the US For a number of reasons. One of them is oil. And so you might say, well, you strip that out because that goes into headline rather than core inflation. But then when you think about, like, everything has oil or energy in it, especially because of transport cost costs. It just builds that upward pressure. Throw in all the data center spending and the story is just like building heat and pressure on everything, and oil is just part of it.

Joe Weisenthal - 2: In some countries with limited resources, governments are left with little choice but to turn the lights off.

F: But wealthier countries are playing a very different game.

Joe Weisenthal - 2: Instead of asking citizens to cut back, the countries who can afford it are spending heavily to absorb the sticker shock at the pump.

F: You know, here in Hong Kong, the government is actually putting aside the equivalent of US$230 million in a subsidy program to help manage soaring fuel prices. It does seem like there's this imbalance in how the burden of the conflict is being carried.

J: Right?

F: You've Got developed economies like Hong Kong and Germany able to afford these subsidies, while you've got emerging countries who literally can't keep the lights on. What do you guys make of that disparity? And I guess the question is, is this something the US policymakers even think about?

Tracy Alloway: Probably not, to be honest. One of the interesting things here is to me is how long the US can actually offset the pain of higher prices. They've obviously been releasing a lot from the Strategic Petroleum Reserve. The question is how long can you actually keep doing it? And apparently the US is now getting pretty close to its operational minimum. So I think the minimum is like 250 million barrels and we're now at 349 million.

Joe Weisenthal - 1: Yeah, it's the lowest. We're back to the post Covid lows.

Tracy Alloway: Yeah, that's right. So the issue in the US is like crunch time could come, right?

F: Like they're going to lose that buffer pretty soon. And I think Asia does seem caught in this trap that really is not of its own making. Right. You've got interest rates that are rising globally, of course, driven by the war shocks and the AI investment boom centered in the US and the West. You've got the US dollar really strong right now. What do you is impact of the US Dollar strengthening on emerging Asian economies?

Tracy Alloway: Not good. So there's the outlook for economic growth and there's the outlook for the fiscal side, let's say. And so if you're spending money to subsidize oil prices and you're running through your stockpiles, in some instances, then it becomes more expensive the longer it goes on. One of the theories I've seen for the falling gold price recently is that government are selling or central banks are are selling reserve assets in order to raise more foreign affects so that they can buy more oil at the higher prices. So it exacerbates foreign currency exposure for emerging markets and probably weakens their fiscal position in the future and then in terms of economic growth. So obviously if you can't get oil, if you can't get feedstock for plastics, that's pretty much in everything. And so you'll see less economic activity. But on the other hand, if we see some countries respond to higher oil prices by actually building out more clean energy capacity, selling more EVs for instance, then like that could be a little bit of an economic boost. And I'm not saying that it's enough to fully offset the impact, but like it's something at least.

Joe Weisenthal - 1: So like, let's get back to the context of the question, it doesn't matter what the price of the dollar is. People are going to spend a crazy amount of money on memory chips from Korea, period. The won could go up, the yuan could go down. It doesn't matter. We're going to be shipping a lot of dollars to Korea and Taiwan for key infrastructure for the AI buildout. And so I think, yes, absolutely. Like, the strength of the dollar is real. But I think we're in this very odd moment where, because the AI race feels existential, that the traditional macro signals that we would look at, like, rates and effects are being swamp the spending that everyone has just chosen to make for existential reasons on so many aspects of AI.

Joe Weisenthal - 2: Yeah. And to your point, Asia is the backbone of the global AI ecosystem.

F: Factories here produce the chips that power

Joe Weisenthal - 2: the AI revolution, but those factories rely heavily on energy and raw materials.

F: Right.

Joe Weisenthal - 2: So what happens if there's ongoing uncertainty

F: or disruption at the Strait of Hormuz?

Tracy Alloway: Should we do helium?

Joe Weisenthal - 1: Yeah, I was gonna. Yeah, go for it.

Tracy Alloway: No, you start.

Joe Weisenthal - 1: Well, I was just gonna say, like, both of our minds went to helium at the same time. So it's like, this is pretty important in advanced semiconductor manufacturing. Helium. Please don't ask me exactly why, but it has to do something with, like, its ability to go down to incredibly cold temperatures, which is helpful in all kinds of different ways. But there is not a lot of elasticity in helium supply. And so if there's going to be, like, one link where the persistent closure of the Strait of Hormuz might actually intersect with that, it would be if they truly run out of helium, and then you just really have a much harder time making chips.

F: Now I want to shift to interest rates for a bit. Japan's wholesale inflation accelerated in May at its fastest pace in three years. And its producer price index also surged to 60 was quite high. That puts a lot of pressure on the bank of Japan to hike interest rates. And across Asia, you are seeing countries raising their inflation projections and pushing interest rates higher. What do you think would be the broader impact of prolonged inflation across Asia and what does it mean for US Consumers?

Tracy Alloway: So the inflationary impact is there. Right. And it's not even necessarily oil. It's also those petrochemicals which go into everything. And then the other thing in terms of inflation, Governments and companies around the world are learning that it's important to build up stockpiles, and it's important to build out your energy capacity or your petrochemical capacity or your chips capacity, things like that. If you have everyone all at once trying to do this that consumes resources, right? That is de facto inflationary. And I think that's probably the lesson we have collectively learned from the past few years, is that you don't want to be left high and dry if there's a big disruption. It is really important to have extra stuff. And extra stuff, you know, means higher prices.

Joe Weisenthal - 2: After the break. Why we may not yet have seen the full extent of damage caused by the closure of the Strait of Hormuz and how the fallout from the war is reshaping Asia's relationship with the rest of the world.

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Joe Weisenthal - 2: The supply shock caused by the closure of the Strait of Hormuz is arguably the biggest ever. But by draining reserves, finding workarounds and managing demand, governments have tried to shield their citizens from the pain or delaying it at least. Even if the Strait does open this weekend, Bloomberg's Joe Wiesenthal and Tracy Alloway say that pain might still be coming. Richer countries will be able to spend to ease it, but poorer countries in Asia don't have those resources and that could spell trouble for everyone. You guys spoke with a former farmer, Lorcan Kelly, on one of your recent episodes.

M: The problem's going to arise in 6 months and 12 months time when the decisions we made today about do I plant that field of wheat or do I breed more cattle for next year? And farmers are going to say no, we're not going to do that.

F: You know, across Southeast Asia right now, farmers are now skipping this planting season.

Joe Weisenthal - 1: Yes. Right.

F: Because they can't afford the diesel for the tractors. They can't afford the diesel for the water pumps. Right. That they need to cultivate the crops. And some are actually choosing to leave crops rotting in the ground because they can't afford to harvest. I mean, that's huge, right?

Joe Weisenthal - 1: So this is what I was saying earlier, that perhaps one of the shoes that may be yet to drop, there's a food crisis in Asia and it's perhaps the hierarchy of needs.

G: Right.

Joe Weisenthal - 1: If you're struggling to buy food, you're not going to be buying electronics. Right. From China, whatever it else. And so perhaps one part of the logic for China to reduce its imports is to ease a little bit of that squeeze. But what I've heard, which is that there is this brewing but not yet impacting food issue that will arise in Southeast Asia.

Tracy Alloway: Specifically when it comes to the impact of fertilizer, we're talking about longer timeframes because there are planting seasons. As you just mentioned, one historical anecdote that I learned from Adam Tooze is that apparently in ancient Roman times, emperors would try to time wars so that they weren't during the planting season so that it wouldn't disrupt food supplies and also so that farmers could actually go off and be soldiers. But clearly we seem to have forgotten that lesson.

F: I want to stay on food for a bit, you know, in Thailand. I was there in Bangkok just a couple weeks ago and talked to our colleagues there. I mean they've done some really great reporting on how fishermen in Thailand are keeping their boats anchored because fuel eats up more than half of the cost of every trip. So you know, they basically can't raise the price of their catch. Right. So they're deciding not to go out.

Joe Weisenthal - 2: And I wonder to what extent should

F: policymakers and leaders worry about this turning into a political problem? Right, this ag issue.

Joe Weisenthal - 1: Yeah, I mean, look, I don't know if I ever fully bought the theory, but you know, there are many people who argued, for example, that the catalyst for the Arab Spring was wheat prices that year. And you know, our leadership has other things on their mind. We're talking about this is very classic type of thing that creates real political disruption. And I don't think we should have the hubris to assume that, that these cycles which have probably have data points going back thousands of years, have suddenly stopped.

F: And I guess with sanctions, I mean, I do wonder to what extent that the oil crunch would lead to the weakening of essentially one of the US's biggest non military weapons. Right. Sanctions.

Joe Weisenthal - 1: There was an interesting article in the Wall Street Journal that the North Korean economy is doing surprisingly well. They're actually building a lot of housing and there's sort of quite a little evidence of like improving standard of living and so forth. And of is one of the most sanctioned countries on earth for a very long time. I just think the degree to which sanctions are a powerful tool or that they could really be used to crush any enemy, all of it's being called into question right now.

F: Now let's say the war ends next week. How do you think the world has fundamentally been changed because of this war and how it's played out?

Tracy Alloway: So I think it goes back to I guess the idea of the choke point economy. So everyone has discovered from the past six years that these big one off, supposedly one off disruptions can happen with frequency.

A: Right.

Tracy Alloway: So each disruption is slightly different in what it actually is, but they're happening more often. I mean, I'm sure both of us having been in Hong Kong during the pandemic, I will always keep an extra supply of toilet paper from now until forever. Basically we all learn that. And so I think that impulse is going to stick around for a long time.

Joe Weisenthal - 1: The world is very globalized. I feel like for me coming here to Hong Kong, it's been very helpful reminder like how integrated the world still is. But these are the trend. The wheels are all spinning in the opposite direction of where they were in you know the second half of the 20th century, trade barriers are going up and countries don't trust each other. And that is going to have consequences for both productivity and prices.

Joe Weisenthal - 2: This is the Big Take Asia from Bloomberg News. I'm Juan Ha to get more from the Big Take and unlimited access to all of bloomberg.com subscribe today@bloomberg.com podcastoffer if you like the episode, make sure to subscribe and review the BigTick Asia. Wherever you listen to podcasts, it really helps people find the show. Thanks for listening.

F: See you next time.

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