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Connect the World

Trump Insists an Israel-Iran Deal is Close Despite Fresh Strikes; Iran Halts Attacks on Israel but Warns of More if Necessary; 101 Days into War, Shipping in Strait Remains Nearly Paralyzed; Oil Prices Jump as Fighting Between Iran & Israel Escalates; Xi Jinping Visits North Korea for First Time in Seven Years; New Strikes Raise Doubt Strait of Hormuz Can Reopen Soon. Aired 9-10a ET

Aired June 08, 2026 - 09:00   ET

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

[09:00:00]

(COMMERCIAL BREAK)

BECKY ANDERSON, CNN HOST, CONNECT THE WORLD: Well, left of your screen, view of the White House on the right, Tel Aviv skyline. As President Trump

insists, a deal between Israel and Iran is close, despite the worst escalation since the April 8 truce. It's 09:00 a.m. in Washington, it's

04:00 p.m. in Tel Aviv, and it is 05:00 p.m. here in Abu Dhabi.

From our Middle East programming headquarters, I'm Becky Anderson. This is "Connect the World". Well, stock market in New York opens about 30 minutes

from now. Futures indicate a stronger start. Bear in mind the sell-off in tech stocks on Friday, which dragged these markets lower.

So, a stronger start may be simply a reflection of some bottom picking, as opposed to a response to what we are seeing going on in region. Well, after

the most significant escalation in months between Iran and Israel. Tehran says it is standing down for now. Iranian media, carrying a statement from

the country's military, which says it has delivered a quote, painful response to Israel in support of Lebanon.

It threatens quote, far more severe and crushing measures for further Israeli attacks on Lebanese territory, even in the south of the country.

Let's get you up to speed on what got us to this point. Here's what we know. Reports today indicated new strikes were launched by both Iran and

Israel.

The outbreak started on Sunday with Iran firing ballistic missiles at Israel, making good and a promise of retribution if Israel hit Beirut. Tel

Aviv retaliating with strikes against Iran, despite U.S. President Donald Trump asking Prime Minister Benjamin Netanyahu to hold off.

Earlier today, Trump took to social media, calling for the attacks to stop immediately again, claiming peace talks are on the brink of a breakthrough.

We'll get you analysis from all over. Let's start though right here in Abu Dhabi. Aniseh Bassiri Tabrizi, joining me in the studio.

She is an associate fellow with the Middle East North Africa Program at Chapman House. She's based here in Abu Dhabi, and it's good to have you.

Thank you. President Trump, only a few hours ago, posting the following, Israel and Iran are looking to do an immediate ceasefire, insisting that

things are moving quickly, and that a final deal will be reached.

Trump has been signaling, of course, and he said for weeks that a preliminary deal to close the war is close, but so far none has

materialized.

[09:05:00]

Iran's President posting on X quote, diplomacy and defense are the two wings of national power. We have neither abandoned the field nor the

negotiating table. Two positions. Is this time genuinely different when we talk about the prospect for an end to all of this?

ANISEH BASSIRI TABRIZI, ASSOCIATE FELLOW AT CHATHAM HOUSE: I'm -- not. We have been hearing about the prospect for a deal for weeks now. I think both

sides are willing to get to a deal eventually, but I think the sticking points remain the same, and I think neither side is really willing to

compromise to the point of getting to that deal.

And this escalation between Iran and Israel, I think it's part of this. It obviously is related to developments in Lebanon, but I think it also has to

do with probably Iranian attempts to make it clear that it's still willing, able to deliver pressure and costs to Israel, but also to the U.S. and its

allies across the region.

So, I think it's an attempt to signal that it's time to get to a deal and for the U.S. to compromise, but we know from Trump and the U.S. side that

the position has remained largely the same since negotiations have started.

ANDERSON: Projection of power, then from Tehran. Two Israeli sources have told CNN that Israel will accept the U.S. request to halt strikes on Iran,

but will continue attacks in and on Southern Lebanon. The question at this point, of course, is whether Iran will accept that.

TABRIZI: Indeed. And I think a lot of reports have been you know signaling that this is the first time that Iran is attacking a third country for a

retaliation that does not have to do directly with Iran but I think really if we look back at Iranian behavior this all started back in April 2024

with operation true promise in which Iran started retaliating because of Israeli attack against Syria, in which obviously there were a number of

commanders, Iranian commanders and diplomats who were killed.

But that was the first signal that Iran's attempt to signal deterrence and capability to respond was beyond just attacks on its territory, and this

seems again to be similar to what we have seen back then, and in line with that development.

ANDERSON: What is different for the people of Iran, at least, is that it appears the internet has not been shut down. It had been shut down from the

beginning of January, of course, you know all the way through this conflict until just some weeks ago, people are still able to get in touch with the

outside.

What does that say about where we are here compared to where we were at the start of the war, if anything?

TABRIZI: I think we are not where we were in terms of the escalation, and this is obviously promising, despite the tensions and risks we see that

both sides are still committed to the negotiating table and not to get where it was between end of February and April when the ceasefire took

place.

So, I think this is also in line with what we are seeing from that point of view. If Iran was significantly worried about a potential escalation, I

think the internet would be cut off, but that doesn't seem to be the case. And from my initial conversation with people in Iran.

I don't think there has been the significant blasts, and you know, like the attacks that we have seen until back in April.

ANDERSON: Aniseh, you and I live in Abu Dhabi, of course, this is the UAE. This has been in the crosshairs of the assault from Iran during this

conflict has borne the brunt of the attacks. Khalaf Ahmad Al Habtoor, who is a big businessman here in the UAE.

And is, you know, has a reputation for saying it as it is, has said the following just in the past hour, and I thought it was quite interesting to

pick this apart. He says, and I quote, as Iran and Israel exchange strikes and threats, the most important question remains, who pays the real price?

Are there just the parties? Are they just the parties to the conflict? And what has the war and the escalation achieved in terms of results? And he

calls out, for example, just overnight, Iraq, Jordan, and Syria involved, you know, in this latest escalation, either directly or indirectly. And

what's your sense at this point? This is wider than just the U.S., Iran, Israel, and of course, Lebanon.

TABRIZI: It is. It is. And I think this is partially why Iran and the United States want this to not to escalate to the level that it was.

[09:10:00]

Until it remains an Israel-Iran affair, even with Lebanon included, I don't think we are seeing the level of escalation and involvement across the

region that we have seen in the past. And I think it's in everyone's interest across the region that that is the case. Obviously, the cost and

risk are high because the miscalculation and the potential for things to get out of hand with countries across the region also paying the price once

again, it's high.

So, I think even from the bilateral level, the Israel-Iran level, this is something that is not like the June 2025 12-day war. There was quite

limited, quite capped. The risk of this going back to the February, April war is much, much higher.

ANDERSON: There have been reports that the United States could use frozen Iranian assets to compensate regional allies like the UAE, for example,

where there are war-related damages. Iran's Foreign Ministry spokesman has called this claim quote, absurd. Do you think Iran could or would show some

leniency?

And I guess that would be, you know, a word which would be used by some, not by others, but some leniency on this matter.

TABRIZI: I think it depends what Iran gets in return. I know that, you know, from the Iranian point of view, there are a number of things that it

would want for the war to end, which is obviously the economic compensation, which has been raised at significant times, but also the

guarantees that this does not happen again.

And I think if there is some sort of compromise on that level, maybe, maybe then also the Iranian side would agree to some sort of compensation for the

Gulf countries, which doesn't directly interfere with that. But I think from the Iranian point of view, the compensation towards Iran, and there

were damages to it, has to be part of the package somehow, and I think you know this is a sticking point from the U.S. also, it's hard to me.

ANDERSON: The U.S. President insists that we are, or he is, in the final stages of what he describes as a good deal. It is not clear whether that is

in fact the case. He may or may not know whether that is in fact the case. We continue to report on the escalation that we have seen overnight, and

what we understand to be going on behind the scenes.

Thank you for the time being. Let's get you then the latest from the ground in Iran. CNN's Fred Pleitgen is live there. And we should note CNN operates

in Iran only with the permission of the government, but we maintain full editorial control of our reporting. Fred, what is the latest where you are?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi there, Becky. Well, it's pretty calm now, actually, here in Tehran. Of course, one of the

things that we have also heard over the past, I would say half an hour or so, is that the Iranians have now announced that they have suspended their

military operations after saying that they dealt what they called a very heavy blow to the Israeli side.

But certainly, there was a good deal, a good part of the early morning of this day, where it certainly seemed as though things could go completely

out of control and could possibly go back to the kind of war situation that we witnessed here last June, and then, of course, also in February and

March of this year.

What we woke up to this morning was the announcement that there had been Israeli strikes on Tehran, on the capital, where I am right now, but also,

for instance, on Tabriz in the north of Iran, and then Isfahan in the center of Iran as well, it's unclear what sort of targets were struck

there.

But one of the things that really threatened to escalate the situation was both the Israelis and the Iranians announcing that the Israelis had

targeted a petrochemical facility in the south of Iran, near the Iraqi border. The Iranians then saying they really retaliated against a similar

facility in the north of Israel, near Haifa, but also said that they unleashed missile strikes at Israeli military bases as well, specifically

targeting radar installations there.

The message that the Iranians kept sending throughout the day, and certainly also every time that a new wave of strikes was going on, is that

they were prepared to enter into a larger conflict, but at the same time they also constantly called on the Israelis to stop their fire as well.

The Iranians saying that they weren't prepared to go to a further escalation at any point in time. Of course, the Iranians also right now

still involved with the United States in that effort to try and get a memorandum of understanding between the two countries, going to try to come

to some sort of agreement and enter into broader peace talks, Becky.

ANDERSON: Right. Fred, I know our viewers will forgive the interference on your comms. Having you there, of course, is invaluable, and we will deal

with the challenges. You spoke exclusively with the Iranian Foreign Ministry spokesperson about these negotiations about an agreement or deal,

as the U.S. President calls it. Tell us more about what he had to say.

PLEITGEN: Yeah, absolutely.

[09:15:00]

And the Iranians have consistently been saying that they believe that right now those negotiations are in a difficult position there's some officials

who are even saying that they're in a standstill. And they say one of the big issues is, of course, the Iranian assets that remain frozen.

Iranians want those to be unfrozen, but one of the things that the spokesman for Iran's Foreign Ministry also told me was that the style of

negotiations that they were seeing from the U.S. side, they believe are making the whole process more difficult. Here's what he said.

(BEGIN VIDEO CLIP)

ESMAEIL BAGHAEI, IRANIAN FOREIGN MINISTRY SPOKESPERSON: I can tell you, there are quite a number of sticky points, but the main issue is that the

Americans must understand that they have to recognize Iran's rights. We don't want any concession, by the way.

What we want is our rights under NPT, as far as nuclear issue is concerned. And at the same time, when they're talking about our blocked assets,

they're not going to give us any concession, they simply must stop their sanctions, they have to learn not to talk to Iranians like the way they

have been used to --

(END VIDEO CLIP)

PLEITGEN: -- speaking to me yesterday. And of course, that's one of the things that the Iranians have been saying for an extended period of time,

that for them, especially as frozen assets are a big issue, they want those back as fast as possible. But at the same time, of course, also both sides,

as we've been saying, Becky, still are saying there are some sticking points to try and get to the next level.

Try and get to that memorandum of understanding to then be able to enter into those broader talks, of course, we heard from President Trump earlier

today, where he was writing on his Truth Social account that he believed that there's a lot of momentum right now in those peace talks.

Certainly, the Iranians are saying they believe that the going is quite difficult. Nevertheless, we're hearing from politicians there is that they

say that if the United States negotiates in good faith, the Iranians certainly are open to negotiations as well, Becky.

ANDERSON: Understood, Fred. Thank you very much indeed. Fred is in Tehran, where the time is just before 10 to 5 in the afternoon. Well, Iran is

threatening to resume attacks if Israel continues its offensive in Lebanon. Meanwhile, the Israeli military says it will quote, intensify strikes on

the Iran-backed proxy Hezbollah there.

This comes just days after the Lebanese President told CNN exclusively that the Iran-backed militant group does not represent his country or its

people. CNN's Kevin Liptak is then at the White House. First, let's get you to Jeremy Diamond in Jerusalem. We just heard from Fred.

Iran once again tying its conflict with Iran to Lebanon brings up to speed on where we are from the Israeli perspective.

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Well, indeed, Becky, both Israel and Iran have now agreed, it seems, to halt military operations

against one another, but that doesn't necessarily mean that we're headed for a quiet period in the Middle East.

And that's because Iran, in the same breath that it said that it would halt its military operations against Israel after firing multiple barrages of

ballistic missiles overnight, also said that should Israel continue its attacks not only on Iran but also on Southern Lebanon. Then Iran would

consider that to be a violation and would then strike Israel even more ferociously, it said, than it has over the last 24 hours.

And so, the Israeli government is not going to accept that kind of equation. In fact, that's explicitly the message that the Israeli Prime

Minister's office delivered this morning to government ministers, making clear that Israel intends to continue its operations in Southern Lebanon.

In fact, in the hour after that statement from Iran's military, Israel did indeed conduct air strikes in Southern Lebanon, continuing to go after

Iran's proxy in Lebanon, the Lebanese militant group Hezbollah. And so, it seems like we're at a situation where both sides are taking a pause here,

and suggesting that they're no longer going to carry out strikes against one another.

But so long as Israel continues to carry out strikes in Lebanon, which it certainly intends to do, it seems like Iran is threatening to once again

resume its ballistic missile fire on Israel. When that could happen still is an open question. But it does seem like we are not out of the world yet

in terms of this new flare up of violence that we have seen between these two countries.

President Trump, for his part, has repeatedly indicated that he wants to see these negotiations with Iran play out, and this renewal of conflict

between Israel and Iran is certainly not going to help facilitate that negotiation effort that he is undertaking. So, this continues to be a very

tense and uncertain situation in this region, with Israeli military officials telling us that they are preparing for at least several more days

of conflict with Iran, and potentially even a prolonged conflict, depending on how things go, Becky.

[09:20:00]

ANDERSON: 20 past 9, in Washington. Kevin, President Trump in the past hours telling the "Financial Times" and others that Israel would have to

accept any deal that the U.S. reaches with Iran, saying, quote, I call all the shots. The Israeli Prime Minister still hit Beirut and still retaliated

against Iran in the past few hours, despite that.

If indeed the U.S. President did have that conversation with the Israeli Prime Minister, and those words are true. Then what does this say about the

Trump-Netanyahu relationship at this point?

KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yeah, I mean, I think it just indicates that the two of these men are on diverging paths when it

comes to this conflict. You know, both of them are under extraordinarily high political pressure, both of them face elections in the fall.

But those pressures are completely opposing, you know, Netanyahu, I think under pressure not to ease up against Hezbollah in Southern Lebanon,

encouraged by members of his right-wing coalition to resume the war in Iran, under the impression that the objectives that were laid out at the

beginning of the conflict haven't yet been met.

President Trump, under completely opposite pressure in the United States, where gas prices continue to rise, where the cost of living is going to be

the animating factor in the midterm elections in November. And I think he's aware that the sooner this war is over, the quicker his political fortunes

may improve.

And those sorts of cross currents don't seem as if they have a way to be reconciled, particularly easily. And I think for President Trump, what

makes it even more difficult is as he negotiates this deal with Iran, as he goes back and forth on some of the language in this memorandum of

understanding, the entire thing is somewhat underpinned by the assumption that he has some control over Netanyahu, that he has the ability to tell

Netanyahu when to ease up, and that Netanyahu will listen.

You know, I don't know that Iran would be willing to sign off on an agreement if it didn't think that the U.S. had some sway and influence over

whether Israel resumes the war again. And so, it's all a very difficult situation for him, I think this all lends to the urgency to try and get

this deal completed, but as of now it's not clear just how close they might be.

ANDERSON: Right. Jeremy, it is no secret that Netanyahu is under pressure domestically once again faced criticism from Israeli politicians. Former

Prime Minister Naftali Bennett, challenging Netanyahu, of course, in the upcoming elections at some point September or October this year, said in

the past hours Israel must show it is a quote, sovereign state capable of defending itself.

Netanyahu's far-right National Security Minister saying, quote, Tehran must burn. He's, it seems, stuck between a rock, Donald Trump, and a hard place.

The domestic story. Just explain.

DIAMOND: Yeah, that's absolutely right. And it's part of why the Israeli Prime Minister needed so badly to resist President Trump's urging in that

phone call last night not to carry out a retaliation against Iran. The prime minister had already called off an air strike in Beirut last week at

the request of the U.S. President.

He was lambasted by almost every member of the opposition, every potential prime ministerial contender for showing weakness in the face of that U.S.

request and of Hezbollah's attacks on Northern Israel. And so, when President Trump came to Prime Minister Netanyahu in that phone call last

night and urged him not to retaliate against Iran.

You know the prime minister really needed to clearly make the case for why he felt the need to retaliate, both from an Israeli kind of strategic

defense perspective, but also very clearly from a political perspective here in Israel, because had he not, he would have once again been

criticized for being weak and basically being unable to stand up to the United States, when really the prime minister has, throughout his decades

of political life.

Maintains that his ability to kind of work with the U.S. President to get what Israel needs out of a U.S. President has been so central to his

political life and his political viability into the election campaign that is about to start here, likely in a matter of weeks, with elections

expected to take place in the next three to four months.

Nonetheless, the prime minister is still being criticized here in Israel once again, as there are concerns in Israel about what this kind of new

strategic equation is, given the pressure from the United States not to escalate things in Lebanon, for fear of retaliation from Iran.

[09:25:00]

And as I was just saying in the previous answer, there are still very real possibilities here of further escalation because of continued Israeli

attacks in Lebanon. So, I think this movie is going to repeat itself in terms of President Trump putting his thumb on the scale and the prime

minister having to make a kind of calculus here of whether or not it's worth defying the U.S. President or acquiescing to going forward.

ANDERSON: It does feel like we're in somewhat of a loop. You are right. Jeremy, thank you. Still to come, we are following a key issue in all of

this, the prolonged disruption of the Strait of Hormuz, through which, of course, a fifth of the world's oil exports move. What is going on there as

we speak, and the global impact is after this.

(COMMERCIAL BREAK)

ANDERSON: Well, commercial shipping in the Strait of Hormuz does remain in near total paralysis, at least on paper, since the U.S.-Iran-Israel

conflict erupted over 100 days ago. For more, let's bring in Arsenio Dominguez. He is the Secretary General of the International Maritime

Organization.

Arsenio, good to have you. Over 100 days into this war, a ceasefire faltering. What does this mean for the strait? What's going on, and what

are the conversations that you are having with insurers and shipping companies?

ARSENIO DOMINGUEZ, SECRETARY GENERAL OF THE INTERNATIONAL MARITIME ORGANIZATION: The main concern remains all the thousands of seafarers,

investors that fuel stock inside the Persian Gulf. So, my conversations primarily to start with the governments in the region to provide the

necessary supply and assistance to the seafarers, equally the conversations and negotiations are surrounding the establishment of an evacuation

corridor.

And as soon as the conflict comes to an end to introduce immediately the necessary actions, like clearing the Strait of Hormuz for any possible

mines that exist in the area, in order to allow trade to start resuming and stop the disruption that is not only for the countries in the region, but

is a global disruption, as we all experience it.

ANDERSON: But this is not until what you are speaking to there, this coalition of the willing, not until of course there is no risk of further

conflict, that is not the situation at present. These past 24 hours have very definitely shown the potential for a sort of re-escalation.

How do you read what's going on? And what is the willingness of the international community at this point to support those vessels that need

access?

[09:30:00]

DOMINGUEZ: The reality is that for as long as the conflict continues, and the escalation doesn't take place, and we have the attacks that has

happened in the last 24 hours. There is, of course, an increased concern that the conflict will be longer, and, of course, they will be very

difficult to have an agreement with the relevant parties in the region for the ships to start evacuating and start trading.

Thankfully, right now that has not happened, and I still maintain the negotiations with the countries in order to allow us first to evacuate, but

we do need to focus on first de-escalation. Otherwise, the rest of the countries that are working together with IMO in order to immediately find

the best ways to open up the Strait of Hormuz in a safe manner will not take place.

Countries and parties will not engage until there is actually safe to do so.

ANDERSON: I wonder, is the market, the industry finding workarounds to these disruption risks. And what does that mean for the region? We are

hearing that there are vessels moving with their transponders off, of course. That isn't, you know, that isn't a good state of play.

I mean, that certainly, in and of itself, is a risk. And Bloomberg Javier Blas is posted on X at the UAE, for example. It's an oil company ADNOC has

awarded a tender for around 14 million barrels of crude, and is reportedly preparing a second sale, suggesting smaller vessels operating with their

transponders switched off efforts to, you know, efforts to get this oil and vessels moving.

Is that what you are seeing? Can you confirm that is what is happening.

DOMINGUEZ: We've seen a very reduced number of vessels transiting the Strait of Hormuz. The month of July, the average was around seven vessels a

day that would actually transit. Of course, this is not in the same circumstances, and not in accordance to the numbers that we were averaging

before the crisis of around 130 vessels a day, the same time, because this is putting the lives of the seafarers at risk.

It is not clear for us that is completely safe to transit across the Strait of Hormuz. I continue to reiterate my message to all the ship owners and

ship operators that we need to wait until it is actually safe to do so. We've seen the global impact. The United Nations trade and development of

organizations is already stipulating that global trade will reduce from the estimated 4.7 percent expected for 2026 to around 1.5, 2.5.

We've seen the prices of oil going up by 40 percent but the reality is that what we need is more stability. Our main focus is that the seafarers

continue to be assisted in the region in order for us to be able to evacuate them as soon as possible.

ANDERSON: We're going to leave it there. We thank you very much indeed for joining us. An important interview, an important insight from you today.

There are some 20,000 seafarers stranded on those ships, on those waters, as we understand it. You're watching "Connect the World". There is a lot

more news ahead. Stay with us.

(COMMERCIAL BREAK)

[09:35:00]

ANDERSON: Welcome back. I'm Becky Anderson in Abu Dhabi. You are watching "Connect the World" from our Middle East programming headquarters. These

are your headlines. Israeli sources say Israel will accept a request from Washington to halt strikes on Iran, but it will continue attacking Southern

Lebanon.

That comes after Iran announced it will cease hostilities only if Israel stops striking Lebanese territory. Well, the flare-up in fighting began

Sunday after Israel struck what it called Hezbollah infrastructure in Beirut. A deadly earthquake of magnitude 7.8 has struck Southern

Philippines -- has reports more than two dozen deaths, but response teams are mobilizing to verify more reports of casualties.

President Marcos has ordered government agencies to evacuate residents and to start rescue work. Chinese President Xi Jinping is in North Korea for

the first time in seven years. The aim of his rare two-day visit is to maintain close ties with Pyongyang. China remains the most important

economic lifeline for North Korea, whilst Chinese leadership sees Pyongyang as part of a counterweight to American power.

We are just six or so minutes into the U.S. trading day, so let's check in on how the U.S. markets, stock markets very specifically, are starting off

this new week. The DOW and NASDAQ and the S&P all higher, the NASDAQ by more than 1 percent. Remember, Friday's session was a bit of a rout when it

came to tech stocks.

So, some bottom picking, as it is known in these markets, was expected, and indeed we are seeing that, and these prices higher. Despite the fact that

oil prices have been specifically higher today by as much as nearly 6 percent during the overnight strikes between Iran and Israel.

So, you can see these prices have actually come off quite significantly since I certainly started reporting about eight or nine hours ago. The

renewed strikes, as I say, sent these prices up again. Traders feared indefinite disruption to energy exports, of course, in the region, pushing

those prices higher, and those are now the live prices.

Let's bring in our guest on this. Paul Diggle is the Chief Economist at Asset Manager Aberdeen. He joins us live from Edinburgh in Scotland. It's

good to have you today with us from there. You once said your team was examining a scenario where Brent rockets $280 on the barrel, which would

cause surging inflation and recession that we are, and I quote, here living on borrowed time, and I said once that was some weeks ago.

What do you make of where we are at? And do you still believe that we could see prices significantly higher?

PAUL DIGGLE, CHIEF ECONOMIST AT ABERDEEN: I think it's absolutely still a risk that is beholden on investors to assess and understand. I think what

we learned over Friday, the weekend, now the ceasefire sort of reasserting itself today is that it's clearly extremely fragile, the state of the

ceasefire.

It's observed more in the breach than the observance at certain points. It's a very strange sort of ceasefire, but perhaps President Trump still

has some ability to rein in Israel to try and advance talks, but they are making very limited progress, and meanwhile the strait is still closed.

We still have a very large global energy supply shock, and the point of acute physical shortage, in which non-linearities in the oil price could

then be unleashed. That's still approaching. Nothing is occurring so far that is going to alleviate that global energy shock.

So, while oil markets, I still, I think, still incorporate a good degree of optimism that some eventual deal and supply increase is going to occur, the

risk that the non-linearity is hitting that a sustained closure of the strait causes big rise in prices is absolutely still there.

[09:40:00]

So, 180 oils, it's still a scenario, it's still part of the future distribution. You've still got to understand how markets would react, how

portfolios would react in that world.

ANDERSON: What are investors asking you at this point? Given that what we see in these financial markets is very different from what we might expect

to see, and I'm talking about stocks, I'm talking about bonds here, I'm talking about oil prices and their effect, I'm talking about the macro

picture.

And how are you addressing investor concerns about where they should have their monies deployed at this point. What their investment strategy might

look like.

DIGGLE: Yeah, I think there are two huge questions that I get repeatedly. When does the point of nonlinearities from the oil price in short shortages

in gas, in fertilizers, in jet fuel. When does that kick in? Because most investors, I think, are they're puzzled by how calm the oil price and many

commodity prices, and therefore equity prices, have been through this period.

So, when does that kick in? And two, how sustainable is the AI offset, because the dominant theme for the past two months, you know, after the

initial stage of the conflict is that the AI tailwind has more than outweighed the geopolitics. So, second key question is, does that continue,

or is that an unsustainable state of affairs as well?

So, the way I try and answer that is, I wish I had a crystal ball, so that I could know these things for sure. But in the absence of the ability to

completely tell the future, it's about laying out clear way marks that would tell you when those points are going to occur. So, we don't know

exactly when the short shoes and nonlinearities kick in.

The best bet, June, July seems to be the sort of time it could happen, so were the strait to remain closed, were there not to be diplomatic progress.

We should start getting worried over the course of this month. And next, and then it's about scenarios about understanding that in some of those

worst cases, how would you perform, where can you get protection.

It's not been gold, that's not been the hedge, probably the dollar has been a pretty good hedge. Commodities themselves have been a pretty good hedge

to own during this process. So, understanding, you know, the way markets that would tip you into those scenarios, while keeping exposure to the

upsides as well.

ANDERSON: OK. And what is then the story on the second question that you get asked on this AI offset? What is the answer to that?

DIGGLE: It's been a big offset, because there is such a strong demand side boost to the U.S. and global economy coming from AI CapEx. So, for now, the

U.S. economy is doing just fine. We learned that on Friday, of course, with another above consensus strong payrolls data.

GDP growth is still doing well. So, for now, it is a big demand side tailwind. It's a secular thematic. We observe ongoing structural demand for

the AI build out that I think keeps sort of that thematic in place for now. It's best expressed or traded, I think, in areas the market, such as EM,

where you've got the miners of the rare earth, the producers of the chips that go into that build out, rather than necessarily in the more expensive

Mag 7 tech stocks themselves.

And longer term, there's a positive productivity boost coming there as well, in time, and that may in time, also actually allow interest rates to

moderate, but you get a reduction in inflation. I think that's the base case. The risk, of course, is that valuations are expensive.

And we're about to get, starting this week, these mega cap tech IPOs that are going to inject a new source of equity supply into the market suck out

liquidity from the trade as well and risk disrupting the sort of the thematic, the tailwind, the bull run it's been on base case for now.

I think you can still lean into the thematic that it is more than an offset, but again, there are risks, and there are better and worse ways to

play that theme, where valuations are a little bit more attractive.

ANDERSON: Paul, back to where we started this conversation, Strait of Hormuz oil prices, which I have to say are currently mixed. They were

significantly higher when I started reporting on the escalation around this region about eight or nine hours ago. Seven OPEC plus countries agreed to

raise output quotas by nearly 200,000 barrels a day in July.

[09:45:00]

In practice, though, the group's production capacity and its ability to export, of course, remain largely choked off. You've talked about where the

way marks might be, and that if we haven't seen a solution to the Strait of Hormuz, the traffic in the Strait of Hormuz, you know, it functioning as

well as it should by July, then you see a significant spike in prices, potentially.

I just wonder, when you consider what we've heard from these OPEC countries on their decision for July. What do you make of that? Is that

inconsequential at this point?

DIGGLE: Yeah, at this point it's symbolic, as you say. The real constraint is the strait is closed. It doesn't matter how big a production target you

have, if you cannot ship it out. I think it matters for the medium-term course of oil, clearly, though, because if and when the strait is

reopening, the pressure is going to be substantially downwards on oil prices.

We went into the shock where the break-even oil price was perhaps $65 a barrel, and there was a glut of supply, glut of inventory, and thank

goodness, in many ways, because that is what has supported the global economy in the oil price alongside the AI tailwind, as we've been talking

about.

And even when the strait is reopened, we're going to get production increases. We'll get the flood of what's trapped within the strait at the

moment. Yet, there's some permanent damage to production infrastructure, and that's going to take time, and that's perhaps more of a problem in LNG

than it is in oil.

We've got the UAE, however, outside of OPEC now as well, increasing production. I think there's going to be a race to pump a lot of oil, post

the strait reopening, because this experience has anything accelerated the transition to other fuel sources. I think the race is on to get as much out

of the ground, and actually substantial downward pressure on oil prices, perhaps this time next year, you know, very low prices.

ANDERSON: Right.

DIGGLE: I think that's what we could be talking about.

ANDERSON: Good to have you, Paul. Thank you very much indeed. Good perspective there. Important.

DIGGLE: Thank you.

ANDERSON: Well, Chinese leader is visiting North Korea for the first time in seven years. He aims for his trip up next.

(COMMERCIAL BREAK)

ANDERSON: Well, the Chinese Leader has arrived in North Korea for a two-day visit. Now, this is Xi Jinping's first trip to the nation in seven years.

CNN's Steven Jiang has more now from Beijing for you.

(BEGIN VIDEOTAPE)

STEVEN JIANG, CNN BEIJING BUREAU CHIEF: North Korean Dictator Kim Jong Un and his wife welcoming visiting Chinese leader Xi Jinping and his wife on

the airport tarmac in Pyongyang. It's Xi's first visit to China's isolated neighbor in seven years, and his first trip overseas in 2026.

[09:50:00]

Just a few weeks after he received both President Trump and President Putin, Russia and Beijing, reinforcing the image of Xi increasingly playing

a leading role on the world stage at a time when U.S. global influence is viewed to be in decline. The White House has said Trump and Xi share the

goal of denuclearizing North Korea, but analysts say Xi is unlikely to press Kim on the issue, with Beijing seen as recognizing North Korea as a

de facto nuclear power.

Kim has also continued to double down on the U.N.-sanctioned weapons program, despite Pyongyang's growing ties with Moscow, China remains its

most important ally, providing an economic lifeline to Kim's regime. Unlike during Putin's own rare visit to North Korea in 2024 few foresee Xi and Kim

taking turns at the steering wheel.

But they're driving home the message that North Korea's newfound love with Russia doesn't come at the expense of its special bond with China.

(END VIDEOTAPE)

ANDERSON: When we come back, excitement building up across New Yorkers, Knicks fans look ahead to tomorrow's NBA Finals game. U.S. President, some

say, is raining on their parade. That's next.

(COMMERCIAL BREAK)

ANDERSON: With the New York Knicks about to host their first NBA Finals game since 1999 the city preparing for another historic moment. The first

sitting U.S. President to attend an NBA Finals game. CNN's Gloria Pazmino filed this report.

(BEGIN VIDEOTAPE)

GLORIA PAZMINO, CNN CORRESPONDENT: Well, it's going to look very different outside Madison Square Garden on Monday night, and that's because this area

is going to be closed off to traffic and to pedestrians. So, we're not going to see the usual scenes of celebration and fans gathering at the game

that we have been seeing in the last few games, and that's because the watch party has officially been canceled.

The reason for that is the presidential visit. Trump is expected to attend Monday night's game, and that means there's going to be intensive security

protocols going into the event for anyone who is attending this game, they're being asked to arrive at least two hours early.

They will have to go through double layers of security, essentially airport style security. So, arrive early, arrive prepared, and just know that this

area is going to be very hard to access unless you have tickets to attend the game.

[09:55:00]

The fact that the watch party is canceled, surely a disappointment for a lot of fans, for a lot of Knicks fans who have been relying on the watch

party to watch the games and attend the celebrations. Take a listen.

LANCE THOMPSON, NEW YORK KNICKS FAN: Personally, I think it's kind of a shame. I really wouldn't like it, you know, because we've been waiting for

this for like how long, and you know a lot of people can't afford to get into the game. I'm one of those people, so I was actually looking forward

to going to one of these watch parties.

MALLY WIGGERTON, NEW YORK KNICKS FAN: This is a monumental day in New York City, and you're going to cancel it. It's all right, we're going to find a

way. OK, if you guys know real New Yorkers, we're going to find a way.

ROSS MEYERSON, NEW YORK KNICKS FAN: And you know, like, he could say he's a native New Yorker, but he doesn't live here, and he's kind of pooped on us

for a while, and you know, so like I think this is our time, and he's distracting from our time.

UNIDENTIFIED FEMALE: We don't need that negativity. We need nothing but positive vibes.

PAZMINO: Now, this massive law enforcement presence that we expect to see tomorrow, we're seeing it today. Barricades have already been put in place.

All of this is going into effect, just a few days of another major security event happening in the area, and that is, of course, the start of the World

Cup happening in New Jersey, in the tri-state area, and other host cities around the country.

Law enforcement officials working on the security plans for over a year, they have been preparing for what is suspected to be an unprecedented

moment in terms of the challenges and the demands for public safety. Gloria Pazmino, CNN, New York.

(END VIDEOTAPE)

ANDERSON: All right, good to hear from New Yorkers, right, as if the first hour of "Connect the World" back in a couple of minutes for you for the

second hour.

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END