Starmer fights for political survival

The episode opens with an update on the Strait of Hormuz, which has been effectively closed since a U.S.-Israeli war on Iran began in February. A Qatari gas shipment bound for Pakistan became the first to pass through with Iran's approval since the conflict started. Meanwhile, European oil majors Shell, BP, and Total Energies collectively earned an estimated $4.75 billion from volatile energy price swings, while Asian nations have been forced to turn to coal as an alternative, pushing global coal imports in May toward their third-highest monthly figure on record.

Transport journalist Peter Campbell discussed the counterintuitive pricing dynamics in the airline industry. While flights between Europe and Asia have become expensive due to the Gulf closure, some European budget airlines are actually cutting prices on short-haul holiday routes like Spain and Italy. This is because consumer anxiety about potential flight cancellations has suppressed bookings, prompting airlines to lower prices to stimulate demand. Campbell also noted that airlines are using the crisis as leverage for regulatory concessions, employing a coordinated lobbying effort to roll back rules on compensation, baggage, and refueling. On the question of fuel supply, he reported that British Airways and Air France both indicated sufficient fuel stockpiles to last through the summer, though prolonged closure of the Strait could eventually drain strategic reserves.

On the macroeconomic front, PIMCO's chief investment officer Dan Iveson warned that the energy price surge could force the Federal Reserve to raise interest rates, calling potential cuts 'counterproductive' given the inflationary pressures from the war. The Fed's preferred inflation gauge had already hit 3.5% in March, its highest in nearly three years.

The final segment focused on UK Prime Minister Keir Starmer, who faced mounting calls to resign after Labour lost hundreds of seats in local elections, with its national vote share collapsing to just 17%. FT Whitehall correspondent Lucy Fisher explained that Starmer planned a major speech emphasizing closer EU relations, timed around the 10th anniversary of the Brexit referendum. Fisher noted that both Labour and the Conservatives performed poorly, with voters shifting to third parties, which she described as marking 'the death knell for the two-party system' in England. She attributed public frustration to stagnant living standards since the 2008 financial crisis. A King's Speech on Wednesday was also cited as a critical moment for Starmer to present a coherent legislative vision. Fisher suggested that Starmer's survival may hinge more on inertia than confidence, as Labour MPs opposed to his leadership cannot agree on a replacement.