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We are seeing oil prices on an upward trajectory once again today, despite an 11% drop last week over what's going on in the Middle East. It's the ceasefire that still evidently is remaining intact. The question is, are our negotiations intact after Iranian media said that Iran is walking away from talks for now given Israeli activity in Lebanon? And it's striking that we're seeing Israeli media reports now, Joe, that are suggesting that actually Hezbollah is conveying to the Trump administration that they are willing to accept a ceasefire as we see this intensified Israeli effort against the military. You wonder if this could be a very newsy day on the back end here, Kaye, with the president of the United States that needs to make a decision on an anti-weaponization fund to allow reconciliation to go forward in the next 24 hours and also apparently may need to make some decisions. Remember, he was talking Friday about a final determination. It's not been made yet. The president, having spent a couple of hours in the Situation Room on Friday, is still facing some pretty tough decisions. And so, we want to bring in Tyler Kendall for the latest on this. Bloomberg's Washington correspondent has made her way back over to our bureau from the White House. He spent a lot of time talking on Truth Social over the weekend here. Tyler, I'm still seeing posts that I missed in the throes of Weekend Fund here. He says it's much tougher for me to properly do my job and negotiate when political hacks keep negatively chirping. He's telling people to sit back and relax. It'll all work out well in the end. Does that suggest optimism on his part?
Perhaps. Joe, that's a good point. At this point though, the White House has maintained that diplomatic efforts are ongoing despite what we saw was an uptick in fighting actually in the region. CENTCOM confirming today that they shot down ballistic missiles that were heading towards Kuwait. The IRGC saying that they retaliated after the US targeted Iranian radar and drone sites. Definitely something to watch. At this point though, it really feels like the president is urging patience as we get these reports from Israeli media that apparently the president is speaking right now with Israeli Prime Minister Benjamin Netanyahu because Iran has pulled in that the front in Lebanon must be part of any ongoing negotiation. Something that we've seen Iran do before, right? Try to pressure this in terms of pushing the US's hands in the talk. But I would also point out that at least publicly the updates that we got earlier this morning and yesterday from Iranian state media showed that the two sides were far apart on some of the key issues like Iran saying that any discussion about the disposal of the nuclear stockpile will not be in this memorandum of understanding and that Iran would retain the exclusive authority that was the direct quote over the Strait of Hormuz.
Well, of course that's not what President Trump has said. He has repeatedly said on Truth Social and elsewhere that the US is going to go in and get that nuclear dust out of Iran. So clearly the public messaging, there's a bit of a difference there. It's unclear what private messaging is, assuming that private messaging is still happening because we haven't heard from the US that the talks have actually ended unlike what Iranian state media have said. Right.
Right. So from Iranian state media, we've heard that the two sides have repeatedly traded updated amendments is what they called it to this draft memorandum of understanding. Now the US has made it pretty clear what sort of structure we're pursuing here, that this would be that phased agreement that would need to prioritize the Strait of Hormuz's reopening. We heard President Trump say as much just last week in the cabinet meeting. Then the US could lift its naval blockade in return. And then that would start that second phase of tougher negotiations around what future curbs to Iran's nuclear program could look like and what happens to that stockpile of highly enriched uranium. There are so many different threads here at the moment. But so far at this point, we have to say that the US isn't letting up its leverage. Right. We heard over the weekend some pretty incredible reporting from our colleagues at Bloomberg News that CENTCOM is continuing to provide information to these vessels to help them transit through the strait in a bid to get any sort of supply to market. But so far the US isn't going to deploy those military assets to actually fully escort vessels. So we're still basically locked in a stalemate.
It sure seems like it. The president speaking to the other financial news network as we speak right now, saying, 'I don't care if peace negotiations with Iran are over.' Saying he was going to ask Israeli Prime Minister Benjamin Netanyahu what's going on with Lebanon and says he's not worried about oil prices, convinced once again, as we've heard repeatedly, that they will fall precipitously once the Strait of Hormuz is reopened. But of course, Tyler, it is still closed today. It sounds like there's a lot of cross-currents though. There are people talking today.
The tectonic plates are moving. We could have news later, right?
We certainly could. I mean, we've also seen such a role that our regional partners have played. That's going to be also something to watch. On the weekend, we saw this Wall Street Journal reporting that the UAE was actually a lot more involved than previously thought in the beginning days of this conflict. We mentioned Kuwait and the American base there that was targeted by the IRGC just overnight. So it's interesting to watch some of these other channels and some of these other discussions not necessarily between the US and Iran but the US and other partners including here with Israel. Now, on the Lebanon front, we should say that we did see the broadest incursion into Lebanon over the weekend in nearly two decades, but it came as Israel said that Hezbollah had launched nearly 300 projectiles towards the country. This dynamic though is incredibly important because before the conflict started, the US had long said that they wanted Iran's support of proxy militia groups like Hezbollah to be in any sort of final Iranian deal. But so far, this is one of those avenues that we haven't seen Iran back off on. And that perhaps is also adding to the tensions in what these negotiations will entail because so far we haven't heard that aspect of it be in any of the reporting about what could be in that memorandum of understanding.
All right, Bloomberg Washington correspondent Tyler Kendall, thank you so much as always. Now, as Joe mentioned in a phone interview with the other network, President Trump suggested that he isn't worried about oil prices, which he expects will drop like a rock when the conflict is over. But of course it is seen by some that his pursuit of a diplomatic offramp here, some kind of deal is with the aim of getting oil prices down and the Strait of Hormuz back open. Certainly his former national security adviser John Bolton seems to fall into that camp. He had this to share with our colleagues on Bloomberg this weekend yesterday.
I think Trump is getting what he wants. This is a deal about gasoline prices at the pump in the United States. Trump worries obviously about the price levels people are paying. He's worried about the effect on inflation. He's worried about the effect on the elections in November. But this is not a deal that really ends the war in a satisfactory way for the United States.
For more on this, joining us now is Adam Stulberg, Sam Nunn School of International Affairs chair at Georgia Tech, where Joe and I of course had the pleasure of broadcasting a few weeks ago. Professor, welcome back to Bloomberg TV and radio. When we consider the chances of diplomacy actually even prevailing here, obviously an open question now with what Iranian state media is saying about walking away from talks for the time being, but if we think about the objective they are trying to achieve or at least the US would like to achieve via the reopening of the Strait of Hormuz, the thinking is that would bring some relief to prices at the pump. How quickly would that actually happen even if a deal is to come to fruition?
Well, that's a great question and I do think the diplomatic dimension is adding a lot of volatility to everything and that in the short term is having the impact on prices. But I think there's some long-term challenges to really seeing structural changes in those prices. One of course is that the ships are not where they need to be to be refueled and shipped to the different markets and of course it takes weeks to get to those markets. The infrastructure has been damaged itself. Supply stocks in different countries and consumer countries need to be refilled to maintain the balance of those prices. And of course, a lot of the institutional stabilizers to the oil market have really been torn asunder by this crisis. So there's a lot of uncertainty baked into the system now that's going to be much more protracted than the diplomatic negotiations underway right now.
Which is why some, professor, wonder why oil prices are not in fact higher. I know we're up today. WTI is up 6%. We're about $93 a barrel right now. Brent's at 96. We're well below the highs that we saw at the outset of this conflict. And of course, it's been nothing but time and corrosion ever since the buffers that we were enjoying are going away. Do you suspect that prices could be significantly higher if we see more weeks of this?
Well, I think that prices could be significantly higher if the situation sustains itself through the summer because I think that's where the real consumption is going to be driven. And so I do expect to see if we don't see some damping down of the crisis for prices to begin to move up at a much steeper rate. But I think we're going to be seeing high prices like we are today through at least the first quarter of 2027, even with a diplomatic settlement today.
Well, obviously that would take us well past the midterms. There's some domestic political considerations here. President Trump though has said repeatedly that he doesn't take those domestic considerations into account. He said last week he doesn't care about the midterms. Many that Joe and I have spoken with have said that's really signaling to Iran to let them know that he's not going to be pressured by our own domestic political calendar. But when we think about the other players domestically in the world who might feel this more acutely whether it's in Europe or elsewhere in Asia, I wonder if you feel like this could reach a point where the kind of global energy shortage is blowing over to an extent that there is pressure for other nations to get involved to try to relieve this situation.
Well, I think ultimately the standoff between the United States and Iran is over playing who can play for more time and who feels that time is on their side. I think one of the pressure points obviously for the US and for the Trump administration would be those midterm elections, but obviously other countries have other pressure points and the oil prices are spiking a lot higher and faster for them in Asia and in Europe than they are here in the United States. So there are different pressure points, but I think ultimately what you're seeing is that Trump is trying to dampen the concerns and the opportunities for Iran to exploit anxiety at home by diminishing the potential consequences for the United States while trying to keep pressure on. While as we see with Iran, they feel emboldened by the situation there as evidenced by bringing Israel and Hezbollah back into the negotiations, dragging their feet on the nuclear equation, as was discussed in your previous segment, as well as continuing to fire some missiles on an ad hoc basis.
We asked you a couple weeks ago when we met, professor, about the potential for well closures. The storage crisis, we were told, was looming in Iran. Some thought this would be the catalyst that potentially brings everyone to the table and ends this war. The idea that Iran has nowhere else to put the oil and before they start closing wells might be more willing to talk. We haven't seen that happen yet, however, and I wonder if Iran is simply managing its production more carefully or if that's something that could take place imminently.
Well, it's hard for me to know how imminent that would be. Obviously that is a critical issue but I do think as you mentioned Iran has been able to manage its supply, get it out through other channels obviously, use illicit types of shipments and other outlets so it's trying to buy for time and I think what it's hoping is that time is more on its side than the pressure building up as you mentioned earlier domestically and internationally on the Trump administration to blink.
Well, when we consider who has time on their side, it seems that Russian President Vladimir Putin is getting warnings that time and spending may not be on his. Bloomberg is reporting today that senior government officials, including the Russian Finance Ministry, have warned Putin that spending on the war in Ukraine is on an unaffordable path and risks a widening of the budget deficit. This is even as we see oil prices that are more elevated, which everybody thought would benefit Russia and the relief of some sanctions for Russian crude on the water. How do you see that energy-driven war economy in Russia and the strength of it right now?
Well, I think that report that Bloomberg carried is quite interesting, especially because in the report the finance ministry and the central bankers are particularly calling for cuts in defense spending rather than just overall pain being leveled on the Russian economy. So I think that's noteworthy. But ultimately I don't think Putin's decision on Ukraine is determined by economics. And I do think with oil prices higher than they were when the budget was made earlier in the year that there's maybe thinking by the Putin administration that they can still play for a little bit of time, squeeze out as much as possible while still ramping up the pressure on Ukraine.
Only have about 30 seconds, professor. We're at $4.32 today for a gallon of regular unleaded nationwide. Where do you think we are by the 4th of July?
Well, it's hard for me. I'm not much of an economist or a gambler, but I would say that even with these on-again, off-again negotiations, prices are going to be going up. They need to, you know, I don't, it's very difficult to imagine especially in the heart of summer as the consumption demand goes up and without a fundamental stop of this crisis that we're going to see those prices come down.
Well maybe you don't need to be a gambler. Professor, it's great to have you back on with us. Adam Stulberg, Georgia Tech. Stay with us on Balance of Power. We'll have much more coming up after this.
You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5:00 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcast or watch us live on YouTube.
Yes, it's June 1st. Hard to believe that we're already here. I don't know where 2026 has gone to this point, but it's interesting that it is June 1st today because we thought we might be seeing a signing ceremony in the Oval Office at the White House, something today because this was the day that President Trump said he wanted to have a budget reconciliation bill to fund ICE and CBP on his desk for signature having passed both chambers of Congress. It has passed neither to this point. 72 billion worth of spending that we're talking about here going to fund these agencies for 3 years. But it's getting held up by a separate unrelated but now related issue which is the $1.776 billion anti-weaponization fund that Republicans want to see some guardrails around before they're willing to move forward.
So welcome to June, rabbit rabbit, no bill. And it's not just that. Remember the ballroom at one point was going to be coupled with this giving a lot of members of Republican leadership ag.
I don't know if he's potentially still there now if we knew that he left, but he was behind closed doors with President Trump talking about this anti-weaponization fund that reports suggest Kaye could be pulled altogether by the White House if not given guardrails, some of which we talked about with Senator Rick Scott a couple of evenings ago. But it's something that they need to figure out very quickly if they're going to have a voterama by tomorrow night and actually get the gears turning on this.
Yeah. So the question is, can they and what ultimately would those guardrails look like knowing that this is a partisan piece of legislation we're talking about? They only need to find 50 votes in the Senate for it. But can you get to 50 without adequate guardrails knowing that there are a couple Republican senators who have been basically ousted by the president in their primaries who might be feeling like they're ready for a fight.
The new YOLO caucus we keep hearing about. Let's assemble our political panel for their take on this. And they do have one. Bloomberg politics contributor Jeanne Sheehan Zaino, our Democratic analyst and democracy visiting fellow at Harvard Kennedy School's Ash Center is with us alongside Republican strategist Maura Gillespie, the founder of Bluestack Strategies. Maura, I'll start with you. As you spent a good chunk of your career working for a former Republican speaker of the House in John Boehner, how do you manage this one? Is the job for Mike Johnson, which seems to get harder on the daily, to convince the White House to withdraw this idea altogether or craft enough guardrails that makes the rest of the conference happy?
Well, I think when it comes to Donald Trump, you have to play to his ego. So, what is going to be more palatable for him? Does he feel better about hearing that there's going to be guardrails around him? I don't know that that's the case. Or does he pivot, remove this from consideration and go on to the next thing, which I feel is more in line with what Trump does, is that not necessarily taking it as a loss but pivoting to something else that he cares more about at this current moment. Again, I think when you have this judge that's now looking into the case itself, and so then to create this weaponization fund with money that you may or may not have with a judge looking into it, I think it's better to pull it and then pivot your attention elsewhere. And so I think for Mike Johnson, the challenge becomes how do you relay that message to the president without necessarily saying you don't have the support in Congress. I have members who will not touch this with a 10-foot pole and you need to get this off the table so I can do my job. That's obviously not what Mike Johnson's going to do, but he's going to do it in a way that sounds very more appealing to the president and is more in line with showing him flattery and, you know, I'm on your team, I'm on your side, let's work together type thing.
Well, and of course, it's not just Mike Johnson, Jeanne. I would imagine Senator John Thune has a pretty similar message as it was the Senate that had to shove this thing before the Memorial Day recess.
