Trouble in the Strait

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1:19The produce section is bursting with pineapples, mangoes, and kiwis at their juiciest. Grill up fresh seafood paired with tropical fruit marinades or grab and enjoy the spicy Hawaiian pizza, huli huli chicken and more. Finish with a sweet slice of mango yuzu chantilly cake. Savor the tropics and save at Whole Foods Market. Wake Up to Money from BBC Five Live. Hello, welcome to Wake Up to Money. What have been the consequences 14 hours in of the U.S. blockade of Iran's ports? We can't let a country blackmail or extort the world, because that's what they're doing. They're really blackmailing the world.

2:00We're not going to let that happen. We'll get the latest on the situation around the Strait of Hormuz, the legality of it all as well. We'll speak to a businesswoman in Dubai about the hit to sales in her cafes and bars. We'll find out which big bank has invited a specialist artificial intelligence robot into its boardroom. And a few people crying and we had limited information, so we didn't really know what was going on. The EU's entry exit system or EES has come into force and it's not been going to plan for everybody. Wake up to money with Sean Farrington. Good morning. Wake up to money on this Tuesday morning, the 14th of April.

2:37It is just after five o 'clock. Thank you for being with us this morning. 85058, the number to have, as I'm sure you already do, ready on the front of your phones to pop us a message. Let us know your thoughts. Join us in the conversation of all we are discussing this morning. We're going to be getting into those travel issues, getting a fair few headlines, but have you been caught up a little bit in that new EU system? It became fully operational on Friday and, you know, in the worst cases, we've seen many, many people not being able to get on their flights that they were supposed to be because they've been stuck at other parts of the airports around Europe.

3:20Be interested in your thoughts and that. Interested as well in your opinion on being asked to perhaps do your washing at a certain point of the week. Would you do the wash on a weekend and get free electricity? I don't know if you've got an electric car and you would be willing to go even further, changing your charging habits to be able to get cheaper electricity, Bill's story on the front of the Times and picked up in a few places this morning that households are going to be offered free electricity to do their laundry on sunny weekends because of an issue. Well, some will see it as an issue and some will see it as the way the energy production in this country has been heading.

4:02So an issue to help prevent Britain's power grid being swamped with surplus solar energy this summer. summer so 85058 maybe you've taken part in some of the trials and pilots and and actual deals that you can sign up with with some energy suppliers to use your electricity at certain times and get cheaper or even free electricity has that worked for you is there something when you hear that you think great yeah well make sure we do the washing at the weekend and get that big car charge in perhaps um there's uh other ways that you're able to change your habits to be able to take advantage of that kind of thing.

4:39So lots going on for us to chew over and wake up to the money this morning. I've got Thea Green with me, who is the founder of the beauty brand Nails Inc. Thea, very good morning to you. Good morning. I've been interested, waiting to talk to you, because we're starting to get a feel now of so many industries that will rely on somewhere along the line byproducts of the oil industry. There's something that has come to light in recent days over the course of last week is that polyester and synthetics costs have shot up for a lot of clothing retailers. Have you seen some of that in your products that would normally just year by year be getting delivered to you, but now the actual ingredients and where they come from has pushed up costs or going to?

5:28Correct. So obviously Nails Inc. is a big buyer of nail polish and there's a direct link in terms of nail polish because it's petroleum-based. So the rising oil prices feeds directly into our raw material costs, which is just meaning there's a big surge in pricing. And obviously with the US blockade of Iranian ports, that's only expected to get worse. But it also means that suppliers can't confirm pricing when you're actually buying product. You're almost confirming pricing at the point of delivery because no one knows what they're going to need to pass on in reality when they actually ship your product.

5:59And then big delays as well. Is that something that's particularly changed in recent weeks? Because you'll have been used to rising, falling commodity prices over the years. It's not like the oil price stays at one price forever. No. But that change in approach from suppliers there about when. Yes, correct, correct. Because normally with any supplier you would do a yearly, you know, sort of sit down and look at your prices. You wouldn't expect your prices, you know, they would have their margin of error in their pricing. So you wouldn't expect your pricing to change, you know, so quickly. what they can't do at the moment is actually confirm pricing.

6:33Right. And what does that mean for you for the course of the year? How does it change your approach? It just means that we'll be constantly re-looking at pricing, you know, kind of re-feeding that into our numbers and not knowing. There's just not certainty like you would normally know the pricing of nail polish for the year. And you won't be able to do that. You'll be constantly, and it will be increasing rather than decreasing, you'll be constantly looking at increases throughout the year. And it just means that suppliers can change their pricing because they have to very quickly. So does that change when you're having your big meetings about the year ahead, which brands or products, trends you want to be focusing on?

7:07Does that make you a little bit more cautious to throw yourself into anything if you're not actually sure what the price is going to be? Well, you don't know the pricing, but there is a margin. So, you know, there's a sort of margin of where you think that can do. And you can definitely do a good estimate and have those conversations live with the suppliers. But nail polish at the moment is actually having a real boom. You know, beauty tends to do well in times of crisis. So when people aren't buying into big luxury purchases, they tend to buy into these little sort of sanity costs of little treats, you know, a fragrance, a nail polish.

7:36So actually nail polish is performing well and we're buying 30 % more than we were last year. Oh, interesting. And do you notice that even just within, you know, six weeks into this war now and we've talked about changing customer confidence over the start of this year. Have you seen that? Yeah, 2026 for us is about 30 % up, just over 30 % up on 2025. So we've definitely seen customers, I think, you know, buy, which they always do in times of sort of instability. People tend to buy, you know, women tend to buy into beauty rather than into big luxury purchases. You're not buying fashion or cars or potentially holidays with all of the disruption going on around the world, but you will continue to buy those little beauty treats.

8:18And you're stocked in the lights of boots and super drug. when you get a feel for how the wider high street, maybe even the wider shelf, is coping within some of those stores. Are there other aspects of retail that might be feeling a pinch a little bit more now? I think generally there is kind of supply from what's going on geopolitically. There's definitely supply challenges for all brands. For us in beauty, beauty is performing pretty well. Skincare is performing well. Fragrance is performing well. Colour cosmetics is slower, which I think, you know, kind of leans into people are probably having those little treats rather than, you know, going out all the time, which would be what affects colour cosmetics.

9:00What's colour cosmetics? You know, makeup. So makeup tends to, when nail polish and fragrance is doing better, makeup might be a little bit slower, which might be a reality that people aren't going out and about as much as they were. And with work from home and different things, you know, cosmetic sales have suffered a little bit anyway. Interesting. Right. Right. Well, this is a reason why it's fantastic to have you on the show this morning. Thank you. Thank you. Much more to come from Thea. We've got Jane Sydenham with us as well this morning, Investment Director at Rathbones. And Jane, the likes of Thea will be listening to the likes of yourselves talking about the wider global oil prices and the prospects for them and what this means for the year down the line, a lot more than they perhaps were this time last year.

9:45Yes, yes, it seems to become a bit of an obsession at the moment, doesn't it? I mean, everyone's getting familiar with all the different names of all the different types of oil prices, which, you know, everybody thinks is just one single price and that's all you have to watch. But there's lots to think about. And just update us where we are this morning, Jane, in terms of some of the, you know, those latest numbers that people, first thing they're checking when they wake up, if they're running a business that is reliant on this stuff. So the oil price is actually down a little bit this morning.

10:17So Brent crude, which is the sort of main price that we watch, is$98. So down about 1.3 % on the day. This has kind of been driven by trade in Asia at the moment. So still this expectation that there's going to be a de-escalation of the conflict. so for now even though the physical market the short term today's delivery prices if you like are higher the futures market so looking further out is telling us that the conflict is going to come to an end so the market's a bit more calm than you might think. Right that's been the tale for a few weeks it feels like Jane that there's you know there's expectations it will come to an end but you know every day those expectations still seem to be as far away as they were yesterday.

11:05they? Yes. I mean, I think generally this is the unpredictability of the US president who, you know, who can often change his mind. And so the situation goes back to where it was at a relatively, you know, in a relatively short timeframe. The market's got used to that kind of behaviour. So it's trying to look through and say, oh, well, you know, he will back down. Now, whether or not that's justified, we're going to see. But I think markets are so confused that that's what they're doing. They're just positioning and assuming it's all going to be all right. Right. Well, let's have a look at the latest in the Middle East and particularly what ships, if any, are sailing through the Strait of Hormuz because the US President Donald Trump has been telling reporters that Iran wants a deal, as he describes it, very badly.

11:55But this US blockade of Iranian ports now has been in effect for 14 hours. He explained a little bit, Donald Trump about how that blockade was working. Right now we have a blockade. They're doing no business. I didn't like seeing boats come out if they were doing business with Iran, but if there weren't, no boats came out. So now they're doing, Iran is doing absolutely no business and we're going to keep it that way. J.D. Vance, the U.S. Vice President, has accused the Iranian government of engaging in an act of economic terrorism with regards to their behaviour of blocking traffic through the Strait of Hormuz and he's told Fox News that Donald Trump has shown that two could play at that game.

12:39We've got Professor Mark Weller with us, who's Chair of International Law at the University of Cambridge. He's previously worked on international disputes and peacemaking as well for the United Nations. Mark, good morning to you. Good morning. How do you view what is going on with the American blockade, the Iranian, what has been a longer term, the last few weeks blocking of many ships in in the middle east well the original iranian act is entirely unlawful the strait of humus is what is called a strait used for international navigation which must be clear and open in times of peace and war um iran is the victim of an aggressive war it can therefore take actions against the united states and israel and their shipping, but it cannot involve the shipping of everybody else.

13:30On the other hand, a blockade, as now instituted by the United States, is officially, as it were, an act of war. It compounds the original aggression that was launched by the United States, and therefore it is equally as unlawful. And has there been something about the United States approach here that has meant Iran has acted in the Strait of Hormuz, the way it has in a way that many feel it never has before? Well, they have found an asymmetric way to threaten the United States due to the havoc that they are causing in relation to the world energy markets. On the other hand, they are the victim of an armed attack, of an act of aggression of quite a massive scale by the United States and Israel.

14:22And they have tried to find a way to shift the costs of that operation onto really the rest of the world. And that is rebounding on the US, which they are hoping is going to press the US into accepting a settlement, a settlement of the kind they want, which would preserve what they see as their right to pursue at least peaceful nuclear programs. And it is, of course, suspected that they are not entirely peaceful. So how do you view a resolution of this, a calming of what is going on in the Strait of Hormuz? I like your term, calming. That is exactly what is necessary. The initial negotiations in Islamabad were in fact not as catastrophic as some have claimed.

15:08It helped to clarify where the parties are and I think it gives an indication of where a solution might lie. Obviously, in the end, the regime restricting passage through the Strait of Hormuz has to be restored. Iran is insisting that it would keep collecting tolls and regulating passage. That is entirely unacceptable. And it's really quite dangerous to see that the United States seems to think that they can negotiate conditionalities for that passage. You heard Mr. Trump say, oh, well, maybe we'll join in and collect some of the tolls. This is really a matter for the entire global shipping world.

15:50It's not for the US and for Iran to dispose of the right of freedom of navigation, which is an absolute and insuspendable right. The other issue is the nuclear file. No, go for it, go for it. The other issue is the nuclear file, where the honest answer is we are exactly back where we were the day six weeks ago before the armed attacks against Iran were launched. there is no way to address this issue without the United Nations and the international atomic energy as a watchdog over peaceful nuclear activities and more or less what the Omanis had mediated at that early point. You will probably have to return to that and to ensure that Iran surrenders its highly enriched nuclear material or that this is under international supervision de-enriched or some other such solutions.

16:41But the answer is there are solutions for that kind of problem and it is possible for the sides to agree on it. And therefore I would expect that there will be another round of negotiations fairly soon. When you talk about the people who are effectively setting the rules, the laws, I know there can be very different things around trade and passage of ships in the Strait of Hormuz. What is the structure for that? If you say that Iran and the US have been acting illegally in certain parts, what is the process to be able to counter that? Well, there exists the international law of the sea. The United States and Iran, oddly, are two of the few states that haven't signed the United Nations Convention on the Law of the Sea.

17:33But nevertheless, it is accepted that a right of passage, shoos straits used for international navigation cannot be interfered with or abandoned or controlled by the coastal states. And that is an important principle which all other states in the world will wish to pursue. The other thing is that at least Iran is a member of the International Maritime Organization and it cannot simply change the shipping lanes through the Gulf. There's a traffic separation system. ships go one way through a certain route and back the other way through another route so that there are no collisions. This has been rerouted by Iran to go closer to its own shores, deeper into its territorial waters so that they can conduct inspections and collect all of these unlawful tolls.

18:22That is, again, to be arranged through the International Maritime Organization which has clearly rejected any of these Iranian attempts. So there are mechanisms to deal with it, but the trouble is that the issue has arisen in the context of a highly controversial and most would say unlawful war, so Iran doesn't feel particularly bound by any of these rules, given that it thinks it's fighting for its survival. If there were a time where Iran did feel like it was bound by some of those rules, Does that maritime organisation actually have the strength to implement whatever it may be, penalties or orders to actually get around to do anything?

19:09Or is this actually all just showing that a lot of these agreements are sort of just for show? No, they're not for show and they've worked for the past decades without any problem. All of this has been disrupted by an armed conflict that was visited upon the region by the United States and Israel at a time when the important nuclear issue that Iran has caused was just about to be addressed through negotiations. So these mechanisms work perfectly well until and unless states decide that they have such an overwhelming national interest to disrupt the entire system and that's what's happened here.

19:49Professor Mark Weller, thank you so much for your time this morning, Chair of International Law at the University of Cambridge and formerly worked on international disputes and peacemaking for the UN. Wake up to money from BBC 5 Live. Good morning to you. Wake up to money on BBC 5 Live. Households could well be offered free electricity to do the laundry on sunny weekends. So says the Times and this all coming from the National Energy System operator. So it's the body that's relied upon to keep an eye on energy levels and where they're going to be throughout the year and demand alongside that how much we're going to need those various bits of energy.

20:34Often when the comments we then see conclusions about is there a chance of a blackout or not. This is the kind of body that we're talking about. And this report this morning seems to be particularly focusing on some of the consequences about there being loads of solar energy this summer. So one of the suggestions that has been made by the operator has been that households could be rewarded for running appliances like washing machines or dishwashers or charging electric vehicles during periods of excess supply. Jane, this concept of excess supply and us actually not being able to use the energy we're producing efficiently has been quite a key part of our electricity debate in recent times.

21:20Yes, yes, it has. I mean, it's one of the things that's a bit unfortunate about solar is that unless you have storage capacity, you've got to use it there and then. So, you know, it's one of the things that part of our energy infrastructure requires storage if we're going to sort of smooth that out. I mean, I have solar panels on my roof at home. We've had that for the last 10 years and we absolutely turn the washing machine on when it's sunny. But of course, you can't store it, but you can feed into the grid. That's also how the system has worked. but the ability to store energy is a really important part of this in order for the whole system to work effectively.

22:05On that electric journey that you're on, Jane, have you thought more in recent times about having a battery yourself? Because it's notable that whenever you see the adverts pop up from energy suppliers and we've heard in recent weeks on Wake Up To Money, was it the holy trinity somebody described it of solar panels a battery and i think it was the other one a heat pump or electric car i can't quite remember but but you know the the concept of spending a lot of money on a battery but having one in your home that means over the longer term and eventually you sort of pay off that investment because you're able to store some of that if are you thinking about that anymore yes uh in fact we did right at the beginning but the problem is we We just, you know, living in London, space is limited.

22:54We didn't have enough space anywhere to put a battery. If we had, yes, we would have done that because you're right. The whole system together really works well. And Thea, from your perspective, whether it's, you know, running your business or the green household in terms of your surname, rather than being ever, ever greener, as many of these sort of policies are pushing us that way, Is this something you'd be interested in changing your habits for if it meant you got free electricity? Definitely, definitely. And you can see, I think last winter, over 2.6 million households signed up to it. I think what's quite fascinating as a customer-centric business owner is it's actually the grid essentially asking customers to change their behaviour to fit around the renewable energy patterns rather than the other way around.

23:41So it is sort of the opposite of what we would do as a very customer-centric business. But it does feel like where we're heading, smart tariffs and smart appliances and eventually smart homes that will pop your dishwasher on for you when energy is the cheapest. I think it's fascinating. 85058, your thoughts if you've got involved in any of this at any point, Trevor, asking will I be able to take the free supply of electricity to charge my battery at home? Well, I tell you what, Trevor, when we get to see the details, you may well be a part of it. As Thea's describing there, sort of what you imagine the longer term aims might be.

24:16Right, Let's cross back to the Middle East now and have a look at what's happening to retailers in the United Arab Emirates, who've had a pretty tough month of it, unsurprisingly. Footfall across the country's largest shopping malls dropped sharply in March. As we've seen these reports, thousands of international residents and tourists leaving the country and also missiles overhead is going to change things a little bit for people who live there. Natasha Sidaris is founder of Tasha's Hospitality Group. So it operates 14 bars and restaurants right across the UAE, employs more than a thousand people there.

24:51Natasha, thank you so much for your time this morning. What's the last few weeks been like? Thank you for having me on. So, you know, stark difference to when the war first started. I think the initial shock of the war coupled with Ramadan created, of course, a panic. and we saw our restaurants, you know, drop to, you know, over 50 % reduction and in some 80%. That's increased significantly. I think the UAE has done an incredible job at keeping its residents protected. I mean, I don't know of many other countries that, you know, I think we've had over 3 ,000 projectiles coming at us and they've been able to keep us safe.

25:33and then I think coming out of Ramadan and having a massive community in Dubai who actually works and lives there I think the expat community and the majority of the Dubai community is 4 million residents it's almost doubled in the last 10 years and we're seeing a massive support from them that's not to say that things are hunky-dory of course they aren't we are still down between 25 and 30 % as a group which is not ideal in terms of sales in terms of sales but is is much more manageable than what we saw at the beginning of the war you know I think I think a lot of people panicked because it was Ramadan which is historically much quieter and so we were just we acted really quickly in terms of in terms of staff reductions and I mean talk about salary reductions which was across the board for all of us including myself and I'm glad we made that call um so you cut salaries for your staff yeah the entire staff which we've made a promissory note uh to pay them back when the going gets better and and I do believe it will get better um but we had to do that in order to build a significant kitty because we don't know what this looks like is it another month is it another six weeks are we looking at a week in trading up until November December so we've done our forecasts on saying we're only going to recover and go back to some type of normality in November.

27:03I mean that's very interesting you know the almost the ability to cut your staff's salaries overnight like that. Is that one of the differences perhaps? I don't know how familiar you are with retail in the UK but you know for all that we've been through in in recent years and the various shocks to the economy here you know just a company deciding overnight that people might have a pay cut for a certain amount of time wouldn't necessarily be the easiest thing to carry out so not not the easiest thing to carry out we had to get staff buy-in of course and it wasn't something that would just wake up in the morning and implement so it was a meeting across the board with all 1 ,200 staff members, making sure that everyone was comfortable.

27:50And it was a choice really of retrenchment, which is absolutely legal, I'm sure in every single country, you know, we operate in South Africa, we also do operate in the UK. So it was a choice of, okay, team, do we retrench 30 % of you, including head office, or do we all take a haircut as we did in COVID, and stick together as a team and try and get through this as a team. And it was a resounding support of rather taking a haircut. Again, you know, I need to be clear that we are promising the staff their money back. And that's been, you know, written down in a legal contract between ourselves and the staff.

28:27Very interesting. People wanted to go home. Of course, we've allowed them. You know, we've had some staff who wanted to go on unpaid leave. And we've said, absolutely, yes, you're able to do that. and that's fared really well for us because trade is down. Not as bad as it was in those first couple of weeks. I think it was that combination of Ramadan and, of course, the initial shock of a country like the UAE being attacked. Natasha, just briefly, when you say retrench, is that redundancy? Redundancy. Yes, right, gotcha. And when you look at where some of that has rebounded and where it hasn't, is there a difference between, I don't know, the sort of equivalent of suburban cafes and restaurants that you have compared to those that might be in tourist hotspots, office hotspots?