The Threat of Iran’s “No Red Lines” Retaliation

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1:39Jeff Mason:Iran's Supreme Leader, Ayatollah Ali Khamenei, has been killed in today's joint attack by the U.S. and Israel. Our objective is to defend the American people by eliminating imminent threats from the Iranian regime. What the United States is doing is an act of aggression. What we are doing is the act of self-defense.

2:01David Gura:Targets in Iran, Israel and elsewhere in the Middle East are under attack in an unprecedented escalation in the conflict between the U.S. and Iran. It would be wonderful if they negotiate really in good conscience, good faith and conscience. but they are not getting there. The combat operations come after weeks of negotiations between the U.S. and Iran over what remains of its nuclear program.

2:24Joumanna Bercetche:This was not an imminent nuclear threat. This is a military action over regime change, not over the nuclear program.

2:31David Gura:Iranian state TV has reported that at least 200 people were killed in the strikes. The country responded with missile attacks on Israel and strikes aimed at U.S. assets in the region, where at least three U.S. service members have been killed. Iran says it sees no red lines as it continues to respond with counterstrikes.

2:51David Gura:I'm David Gura, and this is The Big Take from Bloomberg News. Today on the show, Bloomberg's Jeff Mason and Jumana Brasechi join me to discuss what we know about the timing and goals of this weekend's strikes and the risks of a widening regional conflict.

3:08David Gura:Bloomberg White House correspondent Jeff Mason and Jumana Brasechi in Dubai have been here with me all weekend long at Bloomberg, along with correspondents across the globe following this story. Jeff, we just now heard the tape from President Trump announcing this operation. He did it in a post on Truth Social, which is an unprecedented move by a sitting U.S. president. What has the president said, Jeff, about why they did this now, why they undertook this at this moment?

3:30Jeff Mason:Well, the president is pitching the operation as having been in response to an imminent threat. And that is something that no doubt people are going to question and look into, but that is the rationale that he used. His people, also his top advisors, told him that the negotiations that were going on in Geneva with Iran about its nuclear program essentially came to a point where the United States concluded that Iran was not interested in talking about its ballistic missile program and was still interested in pursuing a nuclear weapon.

4:06David Gura:Jeff, what does the U.S. want? Is that clear? Are they using a playbook that they deployed in Venezuela just a couple months ago?

4:12Jeff Mason:Well, it seems very clear that regime change is something that they wanted because the president very directly referred to that in his statement when he encouraged people in Iran essentially to rise up and take this opportunity to take over their government. But they haven't, they being the United States in this case, have not laid out how they expect that to happen. And of course, there's some comparisons to the Iraq war and this operation. But where those comparisons don't continue, at least so far, is there are not U.S. ground troops in Iran. And so the president may have less ability to influence that, despite the fact that strikes are continuing.

4:49David Gura:Jumana, you're witnessing the escalation of this firsthand. You're based in Dubai, and I'm curious what things look like there in the wake of these strikes that we've seen.

4:57Joumanna Bercetche:Well, what you need to understand is that a substantial volley of missiles and drones have been directed at all of these Gulf states. And here I'm talking about the UAE, Bahrain, Qatar, Kuwait, even Oman, who were obviously playing a key mediation role in those Geneva discussion. So that was also quite a surprising development. And while most of the missiles and drones have been intercepted, there are bits of debris that actually did cause a significant amount of infrastructure damage. These are financial centers in the Middle East that have prided themselves on political stability and geoeconomic stability in the context of a broader region that tends to be quite hot and cold, I would say.

5:45Joumanna Bercetche:And so the reaction has been pretty notable in that it seems as though many of these Gulf states are losing their patience with Iran. So we just had some comments from a key advisor to the UAE president, Mbizad, warning Iran to return to their senses and to deal with their neighbors in a respectful fashion, because otherwise, and this is a quote, it confirms the narrative that Iran is the biggest source of danger in the region. At the same time, you know, Iran has stopped one step short of going all the way of directly targeting, you know, residential buildings or civilian infrastructure or oil infrastructure.

6:27Joumanna Bercetche:But, you know, who's to say that this isn't going to escalate further?

6:30David Gura:Jeff, I want to pull back a bit. And there was this meeting yesterday of the UN Security Council, which was called for by the Iranians. And Mike Waltz, the U.S. representative to the U.N., was there making the case, the U.S. case for doing this. We've seen responses from other world leaders. European allies are holding an emergency meeting tomorrow. I was just talking with Senator Mark Warner of Virginia, who sits on the Intelligence Committee, talked about the prospects of this being really a U.S.-Israeli mission here, not enjoying wide support of allies. How do you think about the way that the international community has responded to what's happened here?

7:02Jeff Mason:Well, I think number one, that it's not something that President Trump is going to be too concerned about. And that's in large part because he, during this second term, and to some extent during his first term as well, has upended the international order with his own will and with his actions, be it from on the economy using tariffs or these strikes now in Iran and what was done in Venezuela. That said, you know, the international community and other countries and allies or enemies, for that matter, of the United States have a right to voice their opinion. And the United Nations is a place to do that.

7:40Jeff Mason:Whether or not that actually has an impact, though, we'll see.

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10:44David Gura:Jumana, in the statements that we got from the U.S. president, from President Trump, from the Israeli prime minister, Benjamin Netanyahu, there was this entreaty to Iranians to overthrow their government, to put down their weapons and to seek a change of government in Iran. What risks does that introduce, the call for that happening in the wake of an attack that was undertaken from the air, not on the ground?

11:05Joumanna Bercetche:Well, you have to think also that one of the reasons that Iran became such a focal point to the Trump administration was because of those demonstrations in the beginning of the year. That was the catalyst, at least in 2026, obviously, with the background of Iran's multi-decade buildup of nuclear capabilities. But if you recall, back in January, President Trump posted that help is going to be on the way for the protesters and the demonstrators who were taking to the streets. And of course, we know that they were brutally put down by the Iranian regime. And over time, those demonstrations started to peter out.

11:40Joumanna Bercetche:And so here we are, you fast forward about a month later, and the US have now got involved militarily alongside Israel. And it was pretty clear from that original video post that President Trump put up that his expectation is that the Iranian people should also use this as an opportunity to rise up. But of course, that comes with many challenges. The major risk is that this could strengthen the hardliners' hands. They could go down even more aggressively on the demonstrators, on the protesters. There could also be this push to rally around the flag as well and unite the Iranian people against these external threats that are coming through.

12:20Joumanna Bercetche:But then also there's a real risk of broader retaliation. And right now, I think the Iranian regime sees this as a very fight for their existence. And so they're not going to hold back at retaliating, either against their own people or against neighboring countries, which is what we've seen in the last 48 hours.

12:41David Gura:Jeff, what do we know of what the president is watching for here? As you said, his rationale here has been changing, somewhat ambiguous. What is he looking for in the days to come?

12:51Jeff Mason:Well, certainly one of their primary objectives is to prevent Iran from being able to develop a nuclear weapon. And that's another thing that he talked about in his video statement. So the military campaign will no doubt be focused on that and on the resources and infrastructure that is available in Iran that could potentially be used for that and weapons programs, etc. Obviously, we know that they targeted Iranian leadership. And no doubt he'll be watching how Iran responds. We know, as we were just discussing, that retaliation is happening. Does that change any military calculations for President Trump, the United States?

13:33Jeff Mason:How do they respond to that? I imagine they're watching all of those things.

13:36David Gura:Jumana, let me ask you about the oil market, what this means for that. The Strait of Hormuz is a key part of this conflict, a choke point where nearly 20 percent of the world's oil is transported. What is this likely to mean for oil prices in the days to come?

13:49Joumanna Bercetche:Well, even at the run-up to this, oil prices had been lifted by a certain amount of what analysts call geopolitical premium, because there was an expectation that a strike could happen at some point. So we were already up almost around 20%. We'll see where the market opens up. But to your point, the Strait of Hormuz is a key passageway for seaborne oil. And as of now, if you look at the traffic over the weekend, according to Kepler, they have their data analytics. It suggests that the flow of tankers is down around by 75 to 80 percent. So essentially what's happening is tankers and vessels are avoiding going through the straits.

14:29Joumanna Bercetche:So a significant drop in overall activity. At the same time, you know, one thing that you need to think about is the oil that passes through that strait. Most of it ends up going to Asia. So this is oil that's coming through from the Gulf countries, from Iran, but also other countries as well. Saudi Arabia, other GCC nations, the main buyer there is going to be China. So if that oil isn't able to pass through the straits, then obviously the oil has to come from somewhere else.

14:58David Gura:Juman, I understand that OPEC +, that group of nations that produce oil, weighing an increase in production as a result of this.

15:04Joumanna Bercetche:Yeah, that's true. So they actually had their regular meeting today. And on the back of that, they announced an increase of production of more than 200 ,000 barrels a day. That was probably not going to happen in the absence of the weekend's events, because the last couple of months they've just paused with their production output. In Q4 of last year, they were averaging around 137 ,000 extra barrels a day put back to the market. But in light of recent events and in light of perhaps a tightening of the market, they've opted to go with this extra supply increase, which also signals that at least a couple of countries within OPEC +, Saudi Arabia and UAE, who've been pushing anyway to increase OPEC share, the global share of oil, are using this as an opportunity to get more of their oil back on the market.

15:55David Gura:Jeff, I want to end with what might be an off-ramp for the president here. In the run-up to this, there was a school of thought that because this might push up oil prices, maybe the president would avoid doing this, that he is under pressure to talk more about cost of living and affordability. And if gas prices were to rise, that would be a challenge to him and his party going into the midterm elections. How is he thinking about that? And how much of a forcing mechanism do you think that's likely to be here as he tries to game out a path forward?

16:20Jeff Mason:Well, number one, he can't go back. So he's done it now. And there's no way of erasing that. And the impact that it's going to have on the economy and on oil prices is still TBD. I think that'll be very interesting to watch. Certainly you're right to say that the political risk here for him in terms of the midterms is it potentially robs him of one of his favorite talking points, which is that he likes to take credit for low gasoline prices. And gasoline prices are absolutely something that voters watch because it's a part of their daily lives. And when consumers see their prices going up, be it at the grocery stores or be it at the pump, they remember that at the polls.

16:57Jeff Mason:And is that an off ramp? I mean, does it impact whether these strikes continue? I think the answer to that is no at this point, because the United States is all in.

17:09David Gura:And Jamana, what are the expectations in the region for where this goes from here?