Bessent on Global Oil Trade 3/4/26

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0:47Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Treasury Secretary Scott Besant on the state of the global economy and the game change offered by the strikes against Iran. The Iranian regime was the head of the snake for global terror. And we are going to cut off that head and Iran will no longer be able to project terrorism around the world. Besant says he is about to make a series of announcements to support oil trade in the Gulf.

1:32This was a well-telegraphed geopolitical event. The crude market had already moved substantially over the past two months. Plus, all the rest of today's news that got us squawking, like the market reaction to Iran, and OpenAI's Sam Altman on the AI company's deal with the Defense Department. He wished that the deal had not come together so hastily because it made them look opportunistic and sloppy. It's Wednesday, March 4th, 2026. Squawk Pod begins right now. Stand Becky by in three, two, one. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We are live from the Nasdaq Stock Exchange in Times Square.

2:16I'm Becky Quick along with Joe Kernan. Andrew is off today. It was a pretty wild day yesterday. You did see the Dow down by about 1 ,200 points at its weakest levels. It closed only down by about 400%, which is less than 1%. The S &P was down by less than 1 % at the close. Only the Nasdaq was down by more than that. But it was a pretty impressive recovery after what looked like was going to be a pretty tough sledding. Both days. Both days, Monday and Tuesday. Right. We're down less than 1%. We're down about 1 % for the week. The NASDAQ was down like 500 at 1.600 yesterday and came back, cut it in half, basically, those losses.

2:55Yeah. We will talk about some of the other international exchanges that have seen much more pressure, including the South Korean exchange. We'll talk about that in just a moment. But let's focus on what happened here with Treasury markets, too. Yields are back up above 4%. The 10-year now sitting at 407. The two-year is at$3.51. Energy prices have been where so much of the focus has been. WTI is now above$75 a barrel. That's a gain of another 7 tenths of a percent. And what's been very interesting to watch is prices at the pump have risen overnight. I think on the national average, up by about 11 cents.

3:30If you're watching other places, though, you might see more than that. Precious metals have also seen quite a bit of a bid, too. Gold at this point is up by about 1.5 percent,$5 ,200. Weren't we at 5 ,400 just a couple of days ago? Yeah, it was 55. We're not going to look at Bitcoin, but Bitcoin's almost at 72 ,000. And it has been, it looked again like it was going under 60 at one point. But there it is, up 4.4%. Someone yesterday said the crypto winters are four-year cycles, has to do sometimes with the halvings. and they talked about a scary price where, but their objective was it was like down at$40 ,000 or so.

4:12I don't know whether that happened. Winter is coming. But the winter's already here. But, you know, it looks like it's been trying to make a base and trying to make a bottom that kept, you know, tested$62 ,000 several times. And I don't know, does it mean anything it's back above$70 ,000? We'll see. And when you talk about the halving and winter is coming, it sounds like Game of Thrones. The haves and have-nots. Yeah, it does, doesn't it? Or there's something else that serious Christians, what are they waiting for when he comes back? Oh, yes. For the return of... What's it called? The rapture.

4:45The rapture, yes. And who gets left behind? Bitcoin holders feel some rapture after having some... In Asia, South Korea's COSPI index was temporarily halted. It actually ended down by 12%. That was its worst day ever in 46 or 47 years of keeping records on this. Heavyweight Samsung Electronics and SK Hynix file by roughly 10 percent each. The catalyst for the pain on this were South Korea's status as a major oil importer. That makes its stock market especially sensitive to swings in the price of crude. Also in focus, though, fears over the pace of AI adoption and potential for profit taking because the KOSPI was up 75 percent last year.

5:27It was down 12 percent today. The day before it was down by about 7%. And even with those two days of losses, it is still up for the month. So you have to put things in context for exactly what's been happening in this market. Last year, up 75. Yeah, and this year, this month, it's still up, even watching the almost 20 % decline that you've seen in two days. Now for the latest on the Iran war, let's get to CNBC's Dan Murphy in Dubai. Good morning, Dan. Joe, good morning to you. Well, we have just been able to confirm that for a second time this week, drones have targeted Ras Tanura. This is the world's largest crude export hub.

6:04Saudi Arabia's Ministry of Defense confirming an interception took place today that resulted in no damage. But the message is pretty clear here. This is the largest crude oil export facility on Earth with about 6.5 million barrels a day in the crosshairs. So any outage here could cause an energy price shock. And it's not just energy infrastructure. We also saw a drone strike hit the US consulate in Dubai this morning, which also signals that the Iranians aren't just keeping up attacks on the UAE, but also on American diplomatic facilities. That drone strike caused a fire that was quickly put out, and thankfully there were no casualties.

6:44And at this hour as well, shipping through the Strait of Hormuz also remains heavily disrupted, which is keeping oil prices pretty well bid this morning. The world's largest shipping companies also pulling back. MSC, Maersk, CMA CGM and Hapag Lloyd have halted sailings or ordered ships in the region to halt position. President Trump also indicating the U.S. Navy could escort oil tankers through the strait and also offering insurance guarantees for vessels transiting. But it's too soon to say at this point if that is going to be enough to restore confidence and to get some of these shippers moving again.

7:21And then in terms of the markets, we are seeing very different reactions across the region today. Here in the UAE, both the Abu Dhabi and Dubai exchanges resume trading today and almost instantly hit limit down. In Saudi Arabia, we saw higher oil prices providing some support for the energy names like Aramco. And then there's Israel. Take a look at this. A relief rally underway with investors betting that this U.S. and Israeli campaign has weakened Iran and its regional proxy network, which cuts the long term risks for the Israeli economy as well. It's back over to you. And it's interesting, and I guess we should have been able to figure it out ourselves.

8:04But the pivot away from an oil-based economy in the Middle East, maybe there's a method to Iran's madness to some extent, because everything's disrupted. All the glitzy capitals of the Middle East stopping points on global travel, the airports, the tourism industry, people stranded. it's the whole idea that it's a safe place to go for either business, like for, I don't know, Amazon or whomever. That whole concept is now thrown into a flux with what's happening. And that would make sense for why Iran would attack its neighbors to say, look, you're going to pay for this too. You got it, Joe. And for many years now, the Gulf capitals have really been positioning themselves as safe havens for deep pools of public and private capital, aviation hubs, tourism drivers too.

8:57And the attacks that we've seen from the Iranians have been largely symbolic. As you know, they've been targeting not just luxury hotels, but also icons of Dubai like the Burj al-Arab, for example. And the missiles that we've seen being leveled towards this country are coming in thick and fast. Actually, UAE authorities earlier today said that they were able to confirm more than 1 ,000 direct Iranian attacks on the UAE. That is more than any other targeted country combined. In terms of how the Gulf capitals are going to respond, I think that's a big question as well. The UAE said today that it wouldn't be changing its defense position.

9:35It's remaining its defensive stance here as its current strategy. But of course, whether or not we see the UAE and Saudi Arabia perhaps coming together to also retaliate, given the amount of strikes that we've seen from the Iranians, is also a big question mark at this point. And probably something really important. This is like a cornered animal kind of lashing out and doing these things. Without necessarily thinking through what the response from those neighbors it's attacking is going to be. It's like resetting the whole chessboard, though. It's really, I don't know whether anyone anticipated that that would be the deck chair.

10:10However, rearranging everything, allies, friends, enemies in the Middle East, it's really quite amazing to watch, I think. Anyway, Dan, we appreciate your time as we do this visit, I guess, this afternoon for Dan at this point. openai ceo sam altman telling employees his company doesn't get to make operational decisions on how its ai technology is used by the defense department that's according to a transcript of an all-hands meeting yesterday that was reviewed by cnbc altman's been criticized by some workers since announcing a deal with the defense department late last week he told employees the pentagon will allow the company to build safety features it thinks are appropriate but he also made clear Their decisions on how technology is used rest with the defense secretary, Pete Hegseth.

11:03I think he also said he was a little, he wished the deal had not come together so hastily because it made them look opportunistic and sloppy, coming right on the heels of the anthropic situation where the defense department separated from them. But it was an interesting forum that was held with the employees there yesterday. We talked about it a lot yesterday, in fact. Not to imply we want to emulate China, but I don't think China has a lot of woke discussions about what they're able to do with AI over there in terms of weapons systems and everything else. No, but this is when you have private companies that are doing these things, you're going to have this friction that comes about.

11:44Right. Particularly in Silicon Valley. But as Hanks has said, our soldiers deserve the very best. Cheese will be next. Coming up on Squawk Pod, Treasury Secretary Scott Besant. The execution of Epic Fury is proceeding and doing better than planned. Next steps on the engagement in Iran and the role Israel is playing as U.S. ally. The two most powerful air forces in the world now have complete control of the Iranian sky. We will take out their ballistic missiles and the bunkers over the coming days.

12:49When you wake, you will understand a new reality of flavor. You will know. Hangry Joe's. Welcome to our flock. Hangry Joe's hot chicken and wings. If you know, you Joe. The world of business is constantly evolving. And Comcast Business keeps you in step. With secure AI-backed networking in more than 100 countries. Powering 90 % of the Fortune 500 and millions of small businesses. And behind it all, thousands of experts answering your call at 2 a.m. like it's 2 p.m. One partner, that's it. Powering how business gets done for companies around the globe. When you add it all up, no one does business like Comcast Business.

13:30This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast, or find Schwab Market Update wherever you get your podcasts.

14:01Welcome back. This is Squawk Pod from CNBC. Stand Joe by in five seconds. Four, three, two, this is Mike. Thank you. She watched the Squawk Box on CNBC. I thought you knew all this. I'm Joe Kernan, along with Becky Quick. Andrew is off today. I almost just read this right at the top because I had it on my screen here. Now to our newsmaker of the morning, Treasury Secretary Scott Besson. Mr. Secretary, it's good to see you. Joe, good to be with you and Becky this morning. We have been, I guess, focusing on some other secretaries, secretaries of war, secretaries of state, but I just have a feeling that you've been fairly busy as Secretary of Treasury and doing all you can to help in this effort with the war in Iran.

14:48Well, Joe, the Secretary of Treasury and the Secretary of Energy, so Chris Wright and myself, sit on the National Security Council, and I can tell you that we've had months and weeks of planning for an event like this. But I want to congratulate our Department of War and the leadership there. Everything is going magnificently. The execution of Epic Fury is proceeding and doing better than planned. I believe last night we took full control of the Iranian skies along with the Israeli Air Force. So the two most powerful air forces in the world now have complete control of the Iranian sky. And we will begin a we began a massive bombing campaign.

15:43And we will take out their ballistic missiles and the bunkers over the coming days. So many intersections in what we're military is trying to do, what President Trump is trying to do, and what you and the Energy Secretary control, especially with what we're hearing about the Strait of Hormuz. We're watching oil prices. I guess you, out of the corner of your eye, saw the stock markets around the world. pretty good performance in this country over the last two sessions, given what we're undertaking at this point. Well, Joe, if I put on my hat for my previous life as a fund manager, this was a well-telegraphed geopolitical event.

16:31The crude market had already moved substantially over the past two months. So the move we saw on Monday wasn't even in the top 50 moves in crude. And again, what I can tell you is that there's been a lot of biased and bad reporting here. And I would encourage everyone to look through the noise and see where we are going on the other side of this. In terms of the crude markets, the crude markets are very well supplied. There are hundreds of millions of barrels on the water away from the Gulf. But more importantly, we have a series of announcements that we're going to be making. We began yesterday with the announcement that DFC will provide the insurance for both the crude carriers and the cargo ships operating in and around the Gulf over the weekend.

17:34Lloyds of London nullified the insurance. So U.S. government is going to step in. And when it is appropriate and should it be needed, the U.S. Navy will provide safe passage through the straits for the oil tankers. We're a different country now in terms of production, obviously, and obviously President Trump has something to do with that. And we're well supplied in this country now, but it is a global market price and everything else. Any thought, Mr. Secretary, of tapping any of the SPRs? I mean, we tapped it for there was an election coming, and we topped it because prices were too high in the last administration.

18:17And any reason to do that now? Again, Joe, the Secretary Wright, the National Security Council, President Trump, we've all been coordinating on this well in advance. We believe the market is very well supplied. We are in contact with many of the countries around the world via the IEA. there is a gigantic SPR, not only in the U.S., but around the world. But the point you made, Joe, in terms of the energy dominance that President Trump has put forward during this administration, we're in a very, very different position than when the Russians invaded Ukraine. We are at all-time high in production, both for oil and natural gas.

19:07We are an exporter to the rest of the world and US LNG could continues to flow around the world so this is a very different ballgame than in February of 22. Secretary Besson thank you for being with us this morning. The idea of providing insurance to all of those carriers how does that work in practice? Is it something that those certificates are being issued at the moment? We've watched the tankers and all of the ships that are sitting on either side of the Strait of Hormuz afraid to go through it. I don't believe those ships have started moving yet, but how would that insurance work in practice?

19:47When would the Navy actually step in and start doing some of these things? Well, again, Becky, I think we're inside the 12 or 24 hour window from our announcement yesterday. yesterday and that Ben Black, president of DFC, has already had a plan in his pocket for months for this contingency. And we will be moving out to the ship owners, to the insurance brokers and over the coming days. And, you know, I can I can also tell you that the Iranian Navy is substantially degraded. Most of their ships are sunk. And the U.S. has naval and air dominance in the region. If I could ask you to keep your fund manager hat on for just a moment, we were talking earlier this morning about some of the moves we've seen.

20:44The shekel was actually up against the dollar. The Israeli market stabilized. What does that tell you? Again, it tells me that markets live in the future and that someone is willing to look on the other side of this and not to these fantastical media accounts. Becky, I will tell you, the region is not on fire. What is happening is that someone with an iPhone, and look, it's terrible when a hotel gets hit in Bahrain when there is a drone that hits the airport in Doha. But those are one-offs. The Iranian attack capabilities have been substantially degraded. The U.S. is getting stronger and stronger every day.

21:29And the most fulsome part of our campaign is just starting. So there are the people in the market willing to look through this. And that's what I think everyone should do because president trump has a vision here and i think everyone should just step back and think about what what does the world look like you know if we go back and think the conflict in syria there's new leadership there and that is safer today venezuela nicholas maduro has been removed the the this iranian regime that they're ballistic missiles and they will not have nuclear weapons. And most importantly, the Iranian regime was the head of the snake for global terror.

22:13And we are going to cut off that head and the Iran will no longer be able to project terrorism around the world. Secretary, right. Oh, go ahead. No, no, no. I'm saying and that's what markets are looking at, should be looking at. The beginning, I said before, during and after what we're doing as far as actions from the Treasury Department. Keep your fund manager hat on. You have said that some of the sanctions and other actions taken months ago caused what not everyone understands, but a dollar shortage that in some way may have at least made it a more fertile environment for the protests that obviously caused a reaction in 30 ,000 deaths and maybe precipitated what we're doing right now.

23:08Can you go into exactly what you meant by that? And it was intentional? Sure, Joe. So last March, President Trump gave the order for Treasury to exert a maximum pressure campaign on Iran. I said in a speech at the Economic Club of New York in March that I predicted that the Iranian currency would collapse, that we would see the economy collapse thanks to this maximum pressure. So we have been softening up the economy and preparing the ground for what our great warriors are doing right now. So the Iranian economy was vulnerable. We cut off the dollar supply into Iran. All of their oil is sanctioned.

23:55We've been able to keep the funds, many of the funds out of Iran. One of the largest banks collapsed in December. The central bank was forced to print a huge amount of money. Inflation ensued and people took to the streets. So there was an economic crash in Iran in December. And now we have the opening to go in and our military is taking over from the sky and from the sea. Mr. Secretary, can we talk for a second about what you think the CCP is, what's in their calculus right now about what they're watching in terms of all the oil that previously was flowing through the Straits, a lot of it headed to the CCP.

24:44Have you heard, have we heard from China about anything yet? I think that we've publicly seen a statement or a communique from China urging the Iranians to allow passage out of the strait. China is very vulnerable on the energy side. More than 50 percent of their energy comes out of the Gulf. And look, Joe, over time, China had been paying a big discount. They've been paying a gigantic discount in Venezuela. They still have access to the Venezuelan crude, but at a market price. In some cases, they were having a 75 percent discount. They've probably been buying 95 percent of the Iranian crude. That's obviously on hold right now.

25:34And then we'll go from there. When the Supreme Court struck down, or at least modified what the president is able to do in terms of tariffs, I think you made the point, or a lot of people made the point, we can do a full embargo, but we can't tariff something for a dollar. Now we're hearing maybe that the president would like to do something with Spain because of their not cooperating in terms of the effort. Is something like that possible, a trade embargo with Spain? Would you be responsible for that? Again, it would be a combination effort. And look, President Trump's frustration with the Spanish government is justified that, first of all, they've been terrible actors.

26:24They are the only NATO member not meeting their NATO requirement. That's known as a free rider. So the Spanish government is intentionally free riding off the U.S. government and all the other NATO allies who have stepped up. NATO has never been stronger thanks to President Trump. and the Spanish don't want to pay their fair share. And they said, well, you know, we've got the Pyrenees between us and Russia. Well, you know, the U.S. has the Atlantic Ocean and we are the largest contributor to NATO. And then it was unacceptable over the weekend that the Spanish were highly uncooperative regarding the U.S.

27:03bases and what we could do with our planes as we began executing on Operation Epic Fury. So anything that slows down our ability to engage and prosecute this war in the fastest, most effective manner puts American lives at risk. The Spanish put American lives at risk. Mr. Secretary, the president has said that he will raise the global tariff to 15 percent. I believe it still stands at 10 % today. Do you know when that change will be implemented? Becky, that's likely sometime this week. And again, that's under something called Section 122. And that's 150-day authority. And during that time, during the 150 days, we will see studies from USTR on Section 301 tariffs, from Commerce on Section 232.

27:59And it's my strong belief that the tariff rates will be back to their old rate within five months. And those are very fulsome authorities. They have survived more than 4 ,000 legal challenges. They are more slow moving, but they are more robust. Secretary, we obviously would like to talk to you about everything if we could. I don't know how much time you have this morning. But, you know, the dual mandate we can talk about, but we can talk about the Fed in terms of when you expect some movement on the Warsh nomination as well. But I guess I'd start with a discussion we were having about jobs earlier.

28:45And, you know, the new jobs, the number has come down, the average per month. but you have pointed out again and again there's no there's there's less government jobs being added or in general with this administration because of the overriding effort to privatize uh the economy is 4.4 percent in with what you're trying to do is that unemployment rate um as low as as you would expect uh no joe and again so there are several components here one is uh the the government saw a large net contraction in 2025, and we saw private sector jobs created. The other is the effect of two and a half million illegal aliens leaving the workforce.

29:31So the monthly jobs number does not need to be as high for that. And we are at the lowest level as a percent of the total workforce for government jobs since 1966. We are seeing a technology-driven productivity boom. But the other way to get productivity going, Joe, is to have the private sector create the job growth, not the government. As President Trump says, he could create two million jobs anytime he wanted, but they would all be government jobs. And these are the high-paying jobs. We saw construction pick up by 40 ,000 last month. And I expect that's what we're going to see for a while. We're seeing this CapEx boom.