Reuters World News - Iran: Strait of Hormuz, US allies and prediction markets

Episode Date: March 3, 2026

Iran closes the Strait of Hormuz and hits energy infrastructure in the Gulf. America’s European allies walk a tightrope. And online prediction markets are under scrutiny after Democrats levy accusations that they were used to bet on the war in Iran.    *This podcast has been corrected to remove a reference to President Donald Trump backing a criminal indictment against Delcy Rodriguez, the new president of Venezuela. Listen to the Morning Bid podcast ⁠⁠here⁠⁠. Sign up for the Reuters Econ World newsletter ⁠⁠here⁠⁠. Listen to the Reuters Econ World podcast ⁠⁠here⁠⁠. Find the Recommended Read here. Visit the Thomson Reuters Privacy Statement for information on our privacy and data protection practices. You may also visit megaphone.fm/adchoices to opt out of targeted advertising. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, I'm Kim Vinal in Wanganui, New Zealand. It's Tuesday, March 3rd. Today, a crucial global shipping route is shut and Iran warns it will fire at anyone trying to pass through it. Another front opens in the Middle East war, with Hezbollah joining the fight. Traditional US allies in Europe view the Iran operation with skepticism, and prediction markets come under fresh scrutiny. after large bets on the US and Israeli strikes on Iran. This is Reuters World News, bringing you everything you need to know from the front lines

in 10 minutes, seven days a week. It's the world's most critical energy choke point, and Iran has closed it. Tehran says the Strait of Hormuz is off-limits and is threatening to attack anyone who tries to pass through the 21-mile-wide waterway. It's using global trade and its geographic advantage being next to one of the world's busiest oil shipping routes as leverage. More than 20 million barrels of oil pass through the straight daily, accounting for a fifth of the world's total oil consumption.

Reuters shipping correspondent Jonathan Saul says this could become another massive escalation in the conflict. So far there have been about four tankers that have been hit in collateral damage. although there couldn't have been at least one ship that was hit with a drone. It's very unclear because the Iranians are not claiming any sort of direct strikes as retaliation. They've made a few noises about targeting vessels, but certainly the capabilities are there and increasing by the hour. Iran has a massive arsenal of floating mines that they can just lay easily and quickly, which will spread chaos and panic within the narrow strait rapidly.

While we don't know what the days ahead will show, certainly all the indications are that the seaborne side is expected to heat up even further and could become an even bigger and uglier and more intense battleground between Iran asymmetrically and the commercial global shipping fleet. Iran's coast is very much pivotal to a lot of the action and given the importance and critical sensitivity of the straight-haul moves and the neighboring Gulf countries and oil producers, it becomes a much bigger flashpoint.

Iran isn't just threatening to stop the transport of oil. It's also attacking oil and gas fields directly. In Saudi Arabia, smoke rises from Aramco's Rastanura oil refinery, one of the country's biggest, which is now suspended operations. While attacks on Qatar, a nation responsible for about 20% of the world's natural gas has also led to it shutting down its LNG production temporarily. For more on what these developments mean for markets, we're joined by Mike Dolan from our sister podcast Morning Bit.

Hey, Mike. Hi, yeah, look, markets clearly focused on the potential inflation impact of sustained rise in oil of this or even more. What we're looking at is how the interest rate markets are playing out. And clearly the US Treasury bonds and Treasury yields, the cost of borrowing for the US government is starting to rise now rather than being acting as some sort of safe haven. And in the background, what we saw from US manufacturers yesterday was that even before this conflict took place, input prices for them were already rising at the

fastest pace in over two years. So there's a big headache for the Fed coming up. Thanks, Mike. You can listen to MorningBid wherever you get your podcasts. And now a look at other developments in the region where more than 500 people have now been killed. That's according to the Red Crescent. US and Israeli strikes are pushing deeper into Iran, including sites tied to its nuclear program, while Iran is hitting back across the region and opening new fronts. One of those is Lebanon, where Iranian-backed Hezbollah has joined the conflict. Lebanese Prime Minister Nawaf Salam says Hezbollah must back down and hand over its weapons

while residents near Lebanon's border with Israel are fleeing in fear, causing huge traffic jams. And over in Saudi Arabia, the US embassy in Riyadh was attacked by two drones. State television says only minor damage was caused. Meanwhile, satellite imagery now appears to show the first known strikes on an Iranian nuclear site since this war began, with damage at the Natanz Enrichment Facility. the Iran and the UN Nuclear Watchdog dispute what was hit.

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bar records. The U.S. traditional allies are watching with concern. A strike by an Iranian-made drone on a

British air base in Cyprus caused limited damage, but raises tensions about other nations or even NATO

being drawn in. Our Europe editor, Rachel Armstrong has more. For the U.S. major European allies, many of whom have been deeply involved in Iranian diplomacy for years,

they have been relatively reticent. The country that's probably struggling most in its response is Britain. Prime Minister Keir Stama did not allow the Diego Garcia Air Base and the Indian Ocean to be used by America to launch these attacks. Then when the attacks happened, Britain said it felt compelled to join defensive operations against Iran's retaliation. But when Stama was questioned about this by lawmakers on, Monday, he was pretty critical of America. He said you can't change a regime from the skies.

And that has prompted Donald Trump to say that the UK-US special relationship is not what it was once. Rachel says with such a fluid situation, US allies could be forced to change tack. If the Iranian attacks ramp up a lot and there is a risk of the war spreading even further and deeply across the region, you probably would see from Britain, from France, more support. Perhaps the most critical thing to look at is if Turkey came to frame. Turkey is a NATO member. So if that was suddenly drawn into the conflict, then there is a question about whether Article 5 would be triggered.

In the days since the US and Israel began attacking Iran, the aims of the operation and the suggested, timeline for how long it could last have already changed. And we have right from the beginning we projected four to five weeks, but we have capability to go far longer than that. U.S. President Donald Trump in his first press conference since the conflict began, says the U.S. is already ahead of schedule, but that it will do, quote, whatever it takes. Defense Secretary Pete Hegseth, however, is playing down concerns that the campaign could

plunge the U.S. into a new open-ended conflict. This is not a so-called regime-change war, but the regime sure did change. And the world is better off for it. This is not Iraq. This is not endless. And while Republicans say the attack on Iran was within the president's authority, Democrats say the administration has not made its case and plans a war powers vote later this week. Democrats are also heaping fresh scrutiny on online prediction markets. That's where

uses trade on real-world events. Contracts tied to Israeli-U.S. Strikes and the removal of Iran's Supreme Leader were already attracting large bets in the days and even hours before the attacks. And some Democratic lawmakers say these markets could allow people with insider knowledge of military reaction to profit. Here's Wojta's Financial Markets editor, Tom Westbrook. When it comes to Iran, people were placing bets on the timing of any US attacks and on whether Ayatollah Ali Khomeini would be ousted. On prediction market, like polymarket, there was a market for US strikes on Iran in day-by-day timing. Right now on Kalshi, there are markets on who will be the next supreme leader of Iran. Likewise, there's a market

on whether the US and Iran will reach nuclear deal before August. That's what's setting off alarm bells. Critics say those trades come dangerously close to gambling on war and death, which is illegal in the US. And even though prediction markets don't use those terms, some Democrats in the US are demanding change. The other criticism of these markets relates to was effectively insider trading. So Democratic Senator Chris Murphy said on X over the weekend that it's insane that this is legal. And he said he would introduce legislation as soon as possible to ban it.

Californian Representative Mike Levin, also a Democrat, was on X as well. And he said that prediction markets cannot be a vehicle for profiting of advanced knowledge of military action. We need answers, transparency and oversight. To some other news now, and exclusive Reuters reporting shows that Trump's Justice Department is quietly preparing a criminal indictment against Delci Rodriguez, that's the new president of Venezuela. The indictment accuses her of corruption and money laundering. Our report shows that the Trump administration could be using this latest criminal indictment

against Rodriguez as leverage to further his agenda in Venezuela. And for today's recommended read, we've put a link in the show notes to an interactive graphic that maps out the details of Iran's crisis. For more on any of the stories from today, check out Reuters.com or the Reuters app. Don't forget to follow us on your favourite podcast player. If you're listening on a smart speaker, just ask for the latest news from Reuters seven days a week. We'll be back tomorrow with our daily headline show.