Return to Transcripts main page

First Move with Julia Chatterley

Oil Prices Spike After Weekend Attacks On Saudi Aramco; Tens Of Thousands Of General Motors Workers Go On Strike After Union Talks Breakdown; Purdue Pharma Files For Bankruptcy. Aired 9-10:00a ET

Aired September 16, 2019 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:13]

ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange, I'm Zain Asher. And here is what you need to know. Oil prices

spike. The market reacts to the weekend attacks on Saudi Aramco, threatening the global oil supply. And walking out. Tens of thousands of

General Motors workers go on strike after Union talks breakdown. And Purdue Pharma files for bankruptcy. The maker came of OxyContin came to a

framework agreement to settle lawsuits over the opioid epidemic. It's Monday and this is FIRST MOVE.

All right, welcome, everyone. I'm Zain Asher. Let's get you caught up on the action in the oil markets right now after this weekend's attacks on

Saudi oil facilities. Oil prices took their biggest jump in decades earlier in the day with Brent crude surging almost 20 percent, about 10

percent right now. Prices are off their highs, but still posting one of their biggest daily advances in years. Both Brent and the WTI, as I

mentioned are up about 10 percent right now.

Here on Wall Street, futures are pointing to losses of more than a quarter of a percent in U.S. stocks as investors ponder the economic implication of

the attacks and the chances of a U.S. retaliatory strike. The global oil outlook is one of the big factors the Fed to consider as it meets to

discuss interest rates this week and stocks are lower across the board in Europe, mostly finished lower in Asia as well.

Japanese stocks were closed because of a holiday. Meantime, stocks of major oil companies are rallying on expectations for higher oil prices.

Shares of U.S. oil majors, Exxon and Chevron are up about three percent or more in premarket trading. So oil is of course the main driver for today.

The U.S. President has threatened retaliation for the strikes that has disrupted Saudi Arabia's crude oil output. Mr. Trump tweeted that the U.S.

believes it knows who is behind the attacks and is locked and loaded to respond pending verification.

U.S. Secretary of State Mike Pompeo is publicly accusing Iran. Tehran has denied responsibility. But a Commander of the Revolutionary Guard Corps

says Iran is ready for war.

Nic Robertson is in Saudi capital. We've also got John Defterios live for us in Abu Dhabi. Nic, I want to begin with you though. So what sort of

response might we see from Saudi Arabia and the United States?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, President Trump has made it clear already that he is locked and loaded, so that's a robust

response. But he has put it off on the Saudi leadership to take their direction.

He has clearly indicated that he is willing to do what they want and obviously, not as fulsome as everything that they want. But I think we're

really watching the Saudi leadership at the moment. And I think the fact that we haven't heard them blame Iran, that they believe that there's good

reason in their assessment, to not take what the Houthis are saying at face value that it was them firing these drones, these sophisticated drones from

Yemen, that that doesn't add up. And they think more likely, these weapons came from the northwest, possibly Iran, possibly Iraq.

But Saudi officials are not saying this on the record at the moment, and I think the very fact that the headline of one of the national newspapers

here today, talks about concern at the United Nations, rather than talking about what Saudi is going to do. It seems sort of a diplomatic holding

pattern.

So what may they do? Clearly, they cannot have this type of acts against them happen again. Clearly, they need to send a strong message that will

put any actor state or otherwise off from this sort of attack.

And it's hard to imagine how that can be achieved diplomatically. However, the UN GA is a few days away. That's worth noting. But a military strike

of some sort still seems to be an option. But we don't know what the leadership here, the government of Saudi Arabia is considering because

they're not saying it. They're not making it public, and I think this is an expression of caution.

But it's also an expression here that this is a very, very finely balanced, complex situation that has taken regional tensions to an absolute new level

that hasn't been seen here in decades.

ASHER: So Nic, stand by. John, let me bring you in. So how long will it take to actually get oil production from Saudi Arabia back online after

this attack?

[09:05:04]

JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: That's the big unknown, Zain and I've been speaking to sources in Saudi Arabia. They say

this is going to take weeks, not days, and they described it as an unprecedented strike.

In fact, it's a record, knocking out 5.7 million barrels a day in one whack. We've seen other disruptions here in the Middle East that Nic was

referring to, but these have all played out in terms of lost production over a span of 12 to 24 months, not in a single day.

This is the damage to the oil markets, as you suggest, we had the spike up of 20 percent at the open. It didn't last. They cut the losses in half,

but still gains over $6.00 for Brent and better than $5.00 for WTI is substantial.

This is a very fragile balance that the Saudis need to try to manage expectations here. I'm told by sources that they have about 200 million

barrels of supply, which could last them about 35 to 40 days on the lost production they have right now.

But I'm then reading flashes on phone coming from Riyadh, suggesting for the first week alone, we can sustain this level of production. So again,

they're not trying to overplay their recovery going forward, which raises questions about the Strategic Petroleum Reserve in the United States.

Donald Trump said they're ready to use it. But the key questions for the oil traders around the world, when are you going to release it because it

takes at least a week or two weeks to get it out of the system?

And what level are you going to put on to the mark is that market? Is it a million? Two million? Three million barrels a day? Because that's the

void that we're talking about right now. And again, for context here, having covered the invasion of Kuwait back to 1990, it shocked the world

oil market, but this is on an entirely different scale in size. Same thing with the Iran-Iraq War, the invasion of Iraq, the overthrow of Gaddafi in

Libya. This isn't a different league entirely.

And because of the U.S. sanction, Zain, against Venezuela and Iran, there's not a lot of spare capacity, not only an OPEC, but in the world right now

to fill the void of better than five million barrels.

ASHER: All right, John Defterios live for us there. Thank you so much. All right, 48,000, auto workers have downed tools at factories across the

United States. Members of the United Auto Workers Union, walking out of 31 factories and accusing General Motors of putting profits ahead of people.

Vanessa Yurkevich joins us live now with the latest. So in terms of the strike, Vanessa, what exactly is GM offering these workers? And what are

the workers union rather demanding?

VANESSA YURKEVICH, CNN BUSINESS AND POLITICS REPORTER: Yes, and good morning, Zain. These workers behind me have been out here, some since

midnight when this strike took place. This is because GM and the UAW, the Union could not come to an agreement.

If you take a look, some of these workers have been in this picket line for hours now. And what General Motors is saying is that they have offered a

very strong and fair contract. But the Union is saying, "Hey, this does not go far enough." They're asking for stronger health benefits, for more

of an aggressive starting wage for these employees and also more protections for their employees.

We spoke to one woman very early in the morning who had been out here since about midnight, and we asked her why she is here today on strike. Take a

listen.

(BEGIN VIDEO CLIP)

TAMARA ABNEY, DETROIT HAMTRAMCK ASSEMBLY WORKER: We're striking because we want to be treated fairly. This job is very important to me. I am a third

generation General Motors employee, okay. I have two sisters that work here at Detroit Hamtramck with me as well. My father was here and his

uncle before him. Three generations.

I have children, and my children will have children and I want this place to still be around for them.

Blood sweat and tears. You bleed, you cry, you get upset, you get frustrated, you get rolled up, get put out. You know, we work hard for

these guys. We do this so that you guys can have a quality product. If the company is profitable, we want to share in those profits.

(END VIDEO CLIP)

YURKEVICH: And many of these workers are out here for hours and I asked how long do they plan to strike? They say, as long as it takes. They're

really hoping that the union can go into a meeting today and negotiate on their behalf for fair wages. They are going to be out here though, Zain,

in as long as that takes -- Zain.

ASHER: And Vanessa, just give us more context about what's going to be happening in these talks that is about to happen in about an hour or so

from now, 10:00 a.m. Eastern Time because as long as the strike continues, I mean, it could really hit GM hard in terms of profitability.

YURKEVICH: Exactly, just about 10 minutes down the road, the UAW and GM is going to be meeting at about 10:00 a.m. Eastern Time. And the Union is

going into this meeting a little bit frustrated. They say that GM has only met them at about two percent of their demands. So there's clearly a big

gap in where they want to be.

But every day that these employees are not on the job, not producing automobiles for the United States, GM is taking a hit. So both sides

clearly eager to make the deal, but as it stands right now, really a stark difference in where they stand. So we'll have to see what happens after

that 10 o'clock meeting. Very critical to know a little bit more about how close they may be -- Zain.

[09:10:11]

ASHER: All right, Vanessa Yurkevich, thank you so much. Appreciate it. The pharma giant, Purdue is filing for bankruptcy as part of an agreement

to settle lawsuits accusing of helping drive America's opioid crisis.

Jean Casarez is joining us live now. So Jean, just for our international audience, Purdue is the maker of OxyContin. And a lot of people are

blaming them for the opioid crisis in United States. It has caused many, many deaths. Just walk us through how this company is defending themselves

and also what the settlement is just in terms of a monetary value?

JEAN CASAREZ, CNN CORRESPONDENT: Exactly. Well, this is the mega giant Purdue Pharma in the United States. They manufacture OxyContin. They are

really the largest defendant in this national opioid litigation that's going on right now.

And so everyone is looking at them because there were settlement negotiations going on. And they said, "Look, we're going to go into

bankruptcy here." They did. They filed it last night. What does that mean? Well, there will be a plan of reorganization because it now will all

be in the bankruptcy court.

But what had been agreed to prior to filing for bankruptcy was this. The Sackler family that owns Purdue Pharma would guarantee $3 billion would be

given to communities and states and municipalities all over the country. In addition to that, they will sell Purdue Pharma and 30 to 40 of their

international businesses. Ninety percent of those proceeds will be given to communities around the country, 10 percent will be kept by the Sackler

family.

Also, they are now manufacturing a drug that will be given to those around the country that are currently addicted. The Sacklers say they will take

no monies from this. It is worth $4 billion, but that will be distributed all around the country and to territories.

Very important to the Sackler family because they have been sued personally, individually by so many states and others. It's called a

channel injunction. They will want the Federal Court to not have them be personally responsible for anything, but to have it to be part of the

bankruptcy proceeding. That's up to the judge.

And will they continue to sell opioids at all? Well, that's an open question. The judge will make the decision. The test is, is it beneficial

to creditors? Of course, it would be because they'll get money. But the negative is the morality of this, because that's the whole point why this

all happened, it is because of the selling of opioids -- Zain.

ASHER: So Jean, just to put this into context for our viewers, Purdue and the Sackler family allegedly knew that this drug, OxyContin was highly

addictive and very, very high strength and they continue to market it very, very aggressively. Have they actually admitted to wrongdoing and the

various statements that they've put out?

CASAREZ: No, they have not admitted to wrongdoing. And as part of any settlement agreement, they would not admit to wrongdoing. And as you very

correctly said, it is the allegation. This is a trial that is set to begin in October, the first trial of the national litigation, and all of those

things, you're mentioning whether they knew, whether they lied as they marketed this drug, or whether they were following FDA requirements, those

would be material issues.

The fact -- they no longer will be part of this litigation, because now they filed for bankruptcy and will no longer be a defendant. But there are

many other defendants.

ASHER: All right, Jean Casarez live for us there. Thank you so much.

So, these are headlines or stories that are making headlines around the world. Hong Kong has seen its 15th straight weekend of anti-government

protests. On Sunday, 89 people were arrested after some protesters threw petrol bombs at police. They responded with rubber bullets and water

cannon. Dozens were injured.

The man who gave Britain a referendum on leaving the E.U. triggering years of Brexit uncertainty has been speaking out about how he feels now. Former

Prime Minister David Cameron told Britain's ITV News that he thinks about his decision every single day wondering how different things could have

been.

(BEGIN VIDEO CLIP)

DAVID CAMERON, FORMER BRITISH PRIME MINISTER: I totally -- if you're asking me, do I have regrets? Yes. Am I sorry about the state the country

has gotten into? Yes. Do I feel I have some responsibility of that? Yes. It was my referendum, my campaign, my decision to try and renegotiate. And

I accept all of those things. And people including those watching this program will have to decide how much blame to put on me.

And I accept. I can't put it more bluntly than this. I accept that that attempt failed.

(END VIDEO CLIP)

ASHER: All right, stay with us for more on Brexit. We are expecting to hear from British Prime Minister Boris Johnson in Luxembourg this hour.

All right, coming up on FIRST MOVE. As the consequences of the Saudi oil refinery attacks ripple around the world, the former U.S. Ambassador to

Saudi Arabia joins us live to discuss.

Plus, a dent in the Chinese economy as industrial numbers fall to the worst in a decade. We'll get you details from Hong Kong.

(COMMERCIAL BREAK)

[09:18:16]

ASHER: All right, welcome back FIRST MOVE. U.S. futures are still pointing to a lower open across the board here on Wall Street. Take a look

there. The Dow is down about a hundred points or so -- all of this after this weekend's drone attacks on Saudi oil facilities.

Stocks look set to pull back after three straight weeks of gain. The Dow has actually risen for eight straight sessions on hopes that the U.S. and

the Chinese are inching ever so slowly towards a trade deal.

Safe havens like gold are higher today, and U.S. Treasury yields are falling as investors snap up less risky assets following the Saudi attacks.

Now the slowing Chinese economy is heavily dependent on oil imports and its economy could be hit hard by higher prices. All of this as the Chinese

manufacturing sector continues to weaken.

Andrew Stevens joins us live now from Hong Kong. So Andrew, we obviously saw disappointing new numbers from Chinese factories today. Just walk us

through how the trade war has impacted China already in the context of a slowing economy.

ANDREW STEVENS, CNN ASIA PACIFIC EDITOR: Yes, that's right, Zain. We've got some fairly graphic numbers coming out today just showing exactly how

the Chinese economy is slowing. And it's all been underpinned by a pretty startling revelation from the number two of the Chinese hierarchy, Li

Keqiang, who is basically the Premier of China, who said today that it was going to be very difficult for China to get six percent growth or above.

Now, China has actually made the target of between six and six and a half percent growth in 2019. And you have the man who is usually regarded as

the economic leader in China now saying that's going to be a very, very tough ask and everything seems to be pointing down.

And he is saying that on the back of these numbers, which we've seen today, industrial production, weaker than expected. The stuff that the factories

are producing, the stuff that they're selling around the world, particularly to the U.S., industrial production, up four and a half

percent. It was supposed to be penciled in to be 5.2 percent or higher.

[09:20:18]

STEVENS: So that gives you an idea of just how quickly it's falling and how much more it is falling than economists are thinking, Zain. Retail

sales came out today, 7.5 percent growth for the month of August. That was again against an expectation of 7.9 percent of fixed asset investment for

the first eight years, are coming in at five and a half percent, again, below expectations.

So three big pointers there. You've got factory output, you've got people not buying any more, and you've got people investing less as well.

So you put those three together, they are three key engines of growth for China, all slowing more sharply than expected, and all because of the trade

war. And because of the fact that China has been slighted in the past couple of years, because they've been trying to deleverage, trying to get

the debt out of the system - Zain.

ASHER: Yes, it's the trade war, obviously, one factor there. But let's talk about the fallout from the Saudi oil fields attacks that we saw this

weekend, what is likely going to be the impact on Asian countries, specifically China, countries that really rely heavily on Saudi oil.

STEVENS: Well, you're right about China. China is the world's biggest importer of oil. It imports about, Zain, nine million barrels a day, which

incidentally, is roughly what Saudi Arabia produces. It doesn't import all oil from Saudi.

About half of all China's imports come from the Middle East. But the point is, you've got now oil prices 10 percent higher, and if it stays at 10

percent higher, if a premium gets baked into the oil price, A. because of the vulnerability now of the Saudi oil facilities, B. because of the rising

geopolitical tensions or C. because the Saudis have been damaged much more than we know and it's going to take longer than a few weeks to get it

online.

That's all going to contribute to this higher oil price, which hurts the Chinese economy, like it hurts any economy, which is dependent on imported

oil.

So China has strategic reserves, just like the U.S., just like most countries. We don't know the size of those reserves, Zain. It's talked

about around 400 million barrels, which would make it slightly smaller than the U.S., probably about 90 days' worth of supply.

But the Chinese like every other key importer is going to be hoping the damage is not as bad and it's going to get fixed much more quickly than the

worst case scenarios we're hearing which could be months rather than weeks.

ASHER: All right, Andrew Stevens, appreciate it. For more on the market and the fallout from the Saudi oilfield attacks, we are now joined by Chris

Watling. He is Founder and CEO of Longview Economics. Chris, appreciate you hanging with us.

CHRIS WATLING, FOUNDER AND CEO, LONGVIEW ECONOMICS: Hi. Thank you.

ASHER: So we just saw the futures there. The Dow is down about a hundred points. The market is obviously set to open in about eight minutes from

now. Wouldn't you have anticipated that the Dow would be down further given the attacks this weekend?

WATLING: Yes, I think that's remarkably impressive how little the market has reacted really. Obviously, they are down a bit and bond yields are

moving, and the old price has moved dramatically.

But overnight, there's been a reassessment, obviously, of facts, so far and markets have been open for 12 hours really to take into account Asian

trading, but even longer.

So I think it's -- the market is telling you that perhaps things aren't as bad as they seem.

ASHER: So how long until the oil markets recover? Obviously, we're seeing a spike now when it comes to Brent crude. Does it just purely depend on

how quickly the Saudis can get everything back online? We're hearing it could take weeks rather than days, according to our John Defterios. But

Andrew Stevens was just there saying that, hopefully it will be months.

WATLING: Yes, I mean, that that really is the key factor, and that's the great unknown, how quickly can this production come back on?

Because let's not forget, before the attack, the world was sort of awash with oil. There's plenty of it. OPEC was holding back its supply to try

and control the price and underpin the price. So there's plenty -- before the attacks, there's plenty of all around. There's plenty in inventories

and the Strategic Petroleum Reserve that we've heard Trump is going to release and also Saudis got lots of reserves around the world, and there's

a bit of OPEC spare capacity.

So really, the key variable here is how quickly do they get all of this production back online? Because if it's short term, we're fine.

ASHER: Right.

WATLING: If it's long term, we've got a problem.

ASHER: Right, right. That's a problem. Okay, so U.S. shale though, President Trump talking about that. Can we really rely on U.S. shale? I

mean, how much can we rely on U.S. shale to prop up?

WATLING: Well, you know, over time, U.S. shale has been absolutely incredible. I mean, the growth in U.S. shale, I think production has

broadly doubled in the last five or six years. And it keeps surpassing expectations and the breakeven price of shale producers keeps falling,

which is one of the reasons the market is so well supplied with oil before this attack.

So, you are counting on shale, but you know, it's not literally overnight. It's pretty quick in terms of just turning oil back on, but it's not

literally overnight. So we need some of this production back.

ASHER: Okay, let's rewind a few days because before these attacks on Saturday, the biggest sort of talker for the markets was obviously, the

detente in terms of the trade war between the U.S. and China.

You know, how much is that still in investor's minds right now and do they really trust that this detente that we saw last week with the Chinese not

necessarily being willing to retaliate and wanting to delay will actually last and see us through to a truce?

[09:25:17]

WATLING: Well, it is difficult to know, isn't it? But I think the markets are buying into the idea that Trump has got an election coming. So he

needs a deal. And as we saw the Chinese data overnight, it is weak. So really, they need a deal.

So everyone needs a deal, whether it's a half deal of a fudge, who knows. But all of that --

ASHER: The Chinese must be desperate right now given the numbers we just saw come in? How expectant they are about in the economy?

WATLING: I mean, you know, we're now talking about GDP growth with a five in front of it. I mean, China's economy is under a lot of pressure, really

across the board. Everyone talks about housing being strong in China, but even housing is slowing down, and that's been their strongest area over the

last 12 to 18 months.

ASHER: So then the Fed? We all know, let's be real, we all know the Fed is going to cut interest rates.

WATLING: Yes.

ASHER: But does it at all affect how much if we see a slowing down in the trade war?

WATLING: If there's a slowdown in the trade war and a move towards a deal --

ASHER: Yes, yes.

WATLING: I think that takes some of the rates cuts out of the curve. But they're going to cut later on this week, and they'll probably cut one more

time this year, I would have thought. But it's whether or not you get that third or fourth cut further down the line I think that's interesting in

that respect.

ASHER: All right. Chris Watling, live for us. Thank you so much. Appreciate you being with us. Chris Watling there from Longview Economics.

All right, we've got the opening bell after the break, and we will see just what the impact is as soon as markets open over the Saudi oil attack that

happened this weekend. You see the Dow there just down about a hundred points.

My guests was just saying that it's remarkable that the market is that resilient, that we're not down even further than that. All right, see you

on the other side of this break.

(COMMERCIAL BREAK)

[09:30:00]

ASHER: And with that, welcome everyone to Monday morning at the New York Stock Exchange. As expected, we did get a lower open across the board.

We'll put up the numbers right now. Let's see. The Dow is down 111 points already. Wall Street is still reacting to this weekend's oil attacks on

Saudi facilities.

Shares of oil companies are rallying today and that is helping limit the damage on the Dow, but shares of oil price sensitive airlines are falling.

The Dow and the S&P 500 come into this session less than one percent away from record highs after a broad base advanced last week.

Investors has had almost four and a half billion dollars into global stock mutual funds over the past week as trade tensions between the U.S. and

China eased, the strongest cash flow in more than a year.

Let's talk about the global movers with General Motors opening down today. This as 48,000 auto workers strike for better pay. The United Auto Workers

Union and GM are set for more talks later today.

Meanwhile, the shares of oil majors are higher after the attacks on the Saudi Aramco's refinery. Oil prices are spiking after those attacks on

Saudi Arabian facilities disrupted supply, it threw this up 10 percent of the strikes took out half of Saudi production, about five percent of global

output.

Oil is off its earlier highs earlier. Brent crude saw its biggest intraday jump since the 1991 Gulf War. You're joining me now live now is Robert

Jordan. He was the U.S. Ambassador to Saudi Arabia between 2001 and 2003. Ambassador, thank you so much for being with us.

And obviously, the world is talking about oil markets right now and the reaction there, but we have to remember the humanitarian aspect of the war

in Yemen. Just walk us through that.

The UN is calling this the worst humanitarian -- manmade humanitarian crisis the world has ever seen.

ROBERT JORDAN, FORMER AMBASSADOR TO SAUDI ARABIA: Well, it's a horrendous catastrophe in Yemen. The Saudi war in Yemen appears to have no political

solution right now. They have been bombing civilian populations using American bombs, and have really committed atrocities throughout the region

with this indiscriminate bombing.

This is what the Houthis are --

ASHER: Ambassador, Ambassador, unfortunately, I have to interrupt you because we've got a press conference on the oil attack on Saturday in Saudi

Arabia. Let's listen in.

COLONEL TURKI AL-MALIK, OFFICIAL SPOKESPERSON FOR THE SAUDI LED COALITION FIGHTING IN YEMEN (through translator): The preliminary investigation

shows that the attack came from the Yemeni territories. And this was through the Iranian Republican gods and the attack happened by the

terrorist attacks.

The final results of the investigation will be announced as soon as they finish. Once the Saudi Arabian authorities have finished in accordance

with the international law.

There would be some presentation of the types of arms that were used and the places where the drones had been launched. These are the preliminary

investigation to indicate that this was Iranian and that we are working to identify the places where they were launched from.

There will be a press conferences especially for the evidence and the material evidence in order to be shown to the journalists and the media to

show where the attack -- first attack started from.

The initial experts report from the joint coalition forces has reported last year about the humanitarian crisis in Yemen. There has been

corrections to the mistakes that have been made and the wrong information that was presented from last year's report.

Now, we are working through investigations to follow the methodology that was used was not the correcting methodology to deal with the issues in

Yemen.

[09:35:05]

AL-MALIK (through translator): We are here in Saudi Arabia, follow proper procedures and proper laws ...

ASHER: All right, you've just been listening to a live press conference from Colonel Turki Al-Malik who is the official spokesperson for the Saudi-

led coalition fighting in Yemen talking about the attack on the Saudi oil fields on Saturday that knocked off five percent of the world's oil supply.

And they are clearly preparing a response, pointing the finger squarely at the Iranian Revolutionary Guard Corps. I want to bring back Ambassador

Robert Jordan -- former U.S. Ambassador to Saudi Arabia from 2001 to 2003.

So just in terms of preparing some kind of response, what sort of calculation goes into this? Obviously, they're conducting an

investigation, as they mentioned.

JORDAN: Certainly, you want to get the facts straight first. The Saudis have the principal responsibility for this. You need to determine was this

a drone attack? Was this a missile attack? Where did it come from? What's the residue? What are the parts that can be identified before you

try to assess blame?

Obviously, Iran's fingerprints must be all over this. But we don't know whether it was a rogue operation. Sometimes the IRGC, the Revolutionary

Guards are at odds with the political leadership and Rouhani. And it may be that there is some sort of split right now that led to this attack. So

you've got to get the facts straight.

Second, you've got to make sure that you have your allies lined up. The European response to this has been fairly tepid, so far, perhaps they're

also waiting for factual verification. The Brits and the Germans have condemned the attacks. We haven't heard from the French that I know of.

And so we need to be sure that we have rallied our alliances to have a unified front end in responding to this.

And finally, I think we've got to continue the maximum pressure policy of the Trump administration, and maybe convince our allies that they also need

to be much more skeptical of the motives of Iran in dealing with them in connection with the nuclear agreement.

So you've got all of that going on, and then you also, as we were saying earlier, have the war in Yemen with the Houthis that has to be dealt with

somewhere down the line as well.

The humanitarian catastrophe is important, but it's also important to quit spending blood and treasure on a war that has no apparent chance of

success.

ASHER: So Ambassador, just the fact that the likely perpetrators or the perpetrators rather were the Houthi rebels and even though the Iranians may

have assisted the Houthi rebels, the fact that the Houthi rebels are a non- state actor, how much does that complicate a response for the coalition?

JORDAN: It makes it much harder because Iran are playing plausible deniability. They often act through these proxies throughout the entire

region, and this is another example of it, which makes it very hard to hold them properly accountable.

At some point, though, it seems inescapable that their fingerprints are all over this. The Houthis could not have invented drone or missile technology

to this extent. They had to have been aided substantially by Iran.

ASHER: So just one of the likely main priorities for the Saudis right now is really defending, making sure that they shore up their defenses when it

comes to the oil fields. What are the challenges with that? I mean, what are the challenges with sort of how much money they spend, and how they

prioritize making sure that their facilities are as safe as possible?

JORDAN: Well, their crown jewel in Aramco is really at stake here. And so they have to spare no expense in coming up with the proper technology and

the proper intelligence to resist attacks in the future.

If Aramco was going to have any kind of IPO for their stock, they have to convince the investing public that these kinds of attacks are -- can be

properly defended against.

It is a game changing technology -- drone technology and missile technology is very hard to defend against with conventional patriot missile batteries,

for example. And so you've got to find ways to preempt the attacks. You have to find ways to detect the attacks in the first place.

This is something that the Saudis are really going to have to deal with. It's going to add a risk premium to the price of oil and perhaps degrade

the investment reaction to any kind of Aramco IPO.

ASHER: So in terms of the geopolitical tensions in the region, obviously, we saw President Trump come out and saying that the U.S. is locked and

loaded. Obviously, just looking at the choice of words, Iran sees those words, locked and loaded and thinks what?

[09:40:05]

JORDAN: I think they'll probably brush that off as extreme braggadocio on the part of the President who is trying to sound I guess, like John Wayne.

But the real question is what sort of tools do we have in America's toolbox to respond to this? A diplomatic solution? Further sanctions? Rallying

our allies I think is the best course at this stage.

ASHER: All right, Ambassador Robert Jordan, thank you so much. Appreciate you joining us.

All right, still to come, face-to-face, but can they see eye-to-eye? The British Prime Minister meets the President of the European Commission and

guess what's on the agenda. More on that next?

(COMMERCIAL BREAK)

ASHER: All right, right now, the British Prime Ministers is in Luxembourg meeting with the E.U.'s top officials. Boris Johnson has just been in

talks with Luxembourg's Prime Minister after his face-to-face meeting with European Commission President, Jean-Claude Juncker.

Nina dos Santos is in Luxembourg for us. So, Nina, I understand that not much came out of this meeting in terms of the fact that the sticking points

still remain and no surprises there.

NINA DOS SANTOS, CNN EUROPE EDITOR: Yes, it was a two-hour working lunch. The first time that Boris Johnson after taking the helm at Downing Street

seven weeks ago has actually met face-to-face with Jean-Claude Juncker, the most powerful man in the European Commission and the person who could

really have a big say on how to unlock the Brexit dilemma.

They dined for about two hours, came out, didn't say an awful lot. Eventually Downing Street and the European Commission issued their own

different statements. Downing Street's one was a bit more optimistic as we've traditionally seen from Downing Street saying that these are

constructive talks, whereas the European Commission statement was a bit more terse saying that the E.U. is willing to work around the clock, 24/7

over the next 50 days to come before the next Brexit deadline.

[09:45:00]

DOS SANTOS: But it did remind Boris Johnson that basically the ball is in the U.K.'s court, and the U.K. needs to come up with concrete proposals to

get over this issue of the Irish backstop as the main sticking point. And that thus far, the E.U. has not seen evidence of those concrete proposals.

But what we're waiting for here is for Boris Johnson to have a press conference with Xavier Bettel, the Luxembourgish Prime Minister here as you

can see, a normally placid and taciturn Luxembourg, which is Grand Duchy, the second smallest country in the E.U. You don't normally get people on

the streets, but both here and in the location where the restaurant where the lunch took place with Jean-Claude Juncker, there have been people

taking to the streets.

This is the rather large vocal community of dual citizens, some of them who hold British passports who are dead against Boris Johnson's version of

Brexit, and there's also a real feeling here that what we will see is a difference between the way how Downing Street is using language saying that

they are close to a deal and the E.U., doggedly saying, frankly, as yet, nowhere near one -- Zain.

ASHER: All right, Nina dos Santos live for us from Luxembourg. Thank you so much. So cautious optimism from British Prime Minister, but how

warranted is it? Let's speak to Political Commentator and Chatham House Associate Fellow, Quentin Peel. So Boris Johnson, Quentin is saying that

he is cautiously optimistic. What exactly is there to be optimistic about?

QUENTIN PEEL, ASSOCIATE FELLOW, CHATHAM HOUSE: I think very little at this stage. Boris Johnson is in a really difficult awl. He has absolutely

promised, "Scouts Honor, do or die" that he will -- he will have Britain out of the European Union by the 31st of October.

But he is actually facing a Parliament where he has no majority. His majority, so to speak, is minus 43, that has passed a law saying he can't

do that. He has got to ask for an extension. And they've also blocked him on having an early general election.

So he is desperate now to show that he is really trying to get a deal. His problem, I think, is that every time he comes up with any movement that

might help get a deal on the British side, on the side of his own supporters, it is moving away from what the rest of the European Union can

accept.

And if he moves towards the European Union, he loses his own supporters. So he is really trapped. He is trying to make it sound good. But so far,

there's very little sign of progress.

ASHER: So nobody wants a return to a hard border in Ireland, but just walk us through what the alternatives are. Obviously, the backstop continues to

be the main sticking point, is there a way around that?

PEEL: Well, the most likely would seem to be what they call a Northern Ireland only backstop. That's to say that Northern Ireland would

essentially have the same rules and regulations as the Republic of Ireland next door, and then you don't need the border. And that, in essence, is

what the backstop is supposed to do.

But the present proposal would have the whole United Kingdom banned by E.U. rules, and that's what the Brexiteers hate. So what about a Northern

Ireland only solution? That would be very acceptable to the European Union. They would find that no problem at all. That was their original

proposal.

The trouble is that the Unionists from Northern Ireland are horrified at the prospect, because it would make Northern Ireland effectively different

to the rest of the United Kingdom, and they've got a lot of friends among the Brexiteers who might well block that.

So the chances of getting that through the British Parliament are very low.

ASHER: So just in terms of legally, Prime Minister Boris Johnson technically has until mid-October to get a deal with the E.U. or ask for an

extension, he said that he would rather be dead in the ditch than ask for an extension.

But if you could look through your crystal ball, Quentin, do you anticipate that by the middle of October, we will see Boris Johnson asking the

Europeans for an extension?

PEEL: My crystal ball is somewhat cracked and cloudy, I confess, but I think the chances are that one way or another, he will, but he is going to

do everything he can to wriggle out of it. And one way is indeed to come back with a deal.

And if he can come back with a deal and threaten the British Parliament that actually he really will crash out without any deal at all, with all

the really very painful consequences for the British economy and for the British standing in the world, if he does that, then he might just get some

people from the opposition, from the Labour's side who have always been inclined to go for Brexit to come and support him.

[09:50:03]

PEEL: But it's a very difficult sum to go for, and so I think that the chances are he will indeed one way or another be forced to ask for some

sort of extension.

ASHER: All right, Quentin Peel, live for us. Thank you so much. All right, coming up on FIRST MOVE, after the drone attacks on Saudi oil

facilities, the U.S. President says he will dip into emergency fuel reserves if need be, we will have the details, next.

(COMMERCIAL BREAK)

ASHER: All right, welcome back, everybody. Oil is up about 10 percent after drone attacks on the Saudi Arabian oil facilities reduced global

supplies earlier. Crude oil shot up about 20 percent -- that is the biggest intraday spike since the 1991 Gulf War.

The Saudi refinery attacks have clearly spooked the U.S. President Trump authorized the release of oil from the country's huge emergency reserve, if

needed. So more this and how these attacks impact the oil stocks, Paul La Monica joins us live now.

So let's talk about U.S. shale, Paul, how is that likely to take the load off of Saudi Arabia?

PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think obviously, that the U.S. shale boom has made America a much bigger player, of course on the

global oil market, but you can't turn on production on a dime. It takes time to get these oil and gas to the open market.

And that is a big reason why you're still seeing the oil prices, you know, rise so dramatically on this attack on those Saudi oil fields, because the

Saudi is still a huge percentage of the global oil market.

So even with President Trump also agreeing to potentially release oil supplies from the Strategic Petroleum Reserve, that, too would take time to

filter out to the global market. So that's not going to mitigate any of this supply shock immediately. Hence, you're getting this dramatic spike

in prices this morning.

ASHER: And the spiking price is affecting various stocks differently. On the one hand, the oil companies are getting a boost because of the higher

prices obviously being more beneficial to their profitability.

But on the other hand, airline stocks weakened as a result of this because they rely heavily on oil as a cost.

LA MONICA: Yes, definitely. You already had that graphic up earlier showing Exxon and Chevron among the leaders in the Dow today, Marathon,

other big oil company rising, but you're right, United, American, even Southwest, which is known for having their hedges to try and mitigate some

of the day-to-day moves in fuel prices, they are all getting hit today, because of concerns about this dramatic spike in oil.

I think it's going to be very interesting to see what happens to companies like GM and Ford and other big autos as well because oil prices rising

should eventually lead to higher gas prices, which could be a problem for these companies that are once again embracing big trucks and SUVs as their

savior for sales, but they're not going to be as attractive in an environment where gas prices potentially are higher.

[09:55:13]

ASHER: All right, Paul La Monica, live for us there. Thank you so much.

And before I leave you, I want to give you today's "Boardroom Brief." Shares of Airbus are falling in Paris as the U.S. moves closer to placing

tariffs on E.U. exporters. It's all part of a long running dispute over state subsidies for plane makers. On Sunday, the World Trade Organization

agreed to a U.S. request to hit you with tariffs.

And shares in Norwegian Air are over five percent after bondholders agreed to support the airline's debt relief plan. They are letting the airline

postpone the repayment of $380 million of loans by up to two years.

And a Chinese state-run newspaper has criticized the bid by Hong Kong Stock Exchange to buy the London Stock Exchange. "The People's Daily" pointed to

the protests in Hong Kong saying there are persistent worries the LSE's Board has rejected the $40 billion offer from the Hong Kong Exchange, but

the bidder is still hoping to win LSE shareholder agreement.

That's as it for the show. Thank you so much for watching. I am Zain Asher.

(COMMERCIAL BREAK)

[10:00:00]

END