D-48 Hours: Hormuz Countdown Begins

※ Global Morning Briefing summarizes international news from Seoul Economic Daily.

'48-Hour Ultimatum' Met with "We'll Retaliate Too" — Tense U.S.-Iran Standoff

U.S. President Donald Trump issued a 48-hour ultimatum to Iran, but Tehran has escalated its war footing by extending its strike range to include Europe. Reuters noted that "the Iran war has already slipped out of Trump's hands."

Trump warned on May 21 (local time) via Truth Social that he would "devastate Iran's power plants if the Strait of Hormuz is not reopened within 48 hours." The threat came as Iran's blockade of the strait shortly after the outbreak of hostilities sent international oil prices surging past $110 per barrel, amplifying economic shocks. The Wall Street Journal identified natural gas power plants producing 80% of Iran's electricity as the next likely U.S. target.

Iran, however, did not back down an inch. The Islamic Revolutionary Guard Corps (IRGC) countered that "if energy infrastructure is attacked, we will target U.S. and allied energy facilities and desalination plants across the Middle East." Iran also fired two intermediate-range ballistic missiles (IRBMs) for the first time since the war began at the joint U.S.-British military base on Diego Garcia in the Indian Ocean, 4,000 kilometers from the Iranian mainland.

One missile malfunctioned mid-flight and the other was intercepted by a U.S. Navy destroyer, so the strikes failed. However, most major Western European cities including London and Paris fall within the 4,000-kilometer range, heightening tensions across Europe. Danny Citrinowicz, a researcher at the Atlantic Council, assessed that "Iran's decision-making is moving in an increasingly extreme direction."

Meanwhile, Iran is also running a "diversionary operation," sending conciliatory messages offering to open the Strait of Hormuz to countries other than the United States. Ali Mousavi, Iran's representative to the International Maritime Organization (IMO), said "passage is possible after coordination with the Iranian government on security and safety." Some vessels reportedly paid $2 million in transit fees.

Israeli Prime Minister Benjamin Netanyahu signaled escalation, saying "it is time for other countries to join the war." If Iran-backed Houthi rebels also enter the fray, the worst-case scenario of simultaneous disruption to energy logistics through both the Strait of Hormuz and the Red Sea looms. The Financial Times warned that liquefied natural gas (LNG) supplies from the Gulf region could be cut off within ten days.

Israel and Iran Already in Precarious 'Mutual Nuclear Strikes'

The United States, Israel, and Iran have exchanged attacks targeting each other's nuclear facilities, pushing the war toward its worst phase. Roughly one month into the conflict, mutual strikes on nuclear facilities have raised fears of nuclear war.

Iran's semi-official Tasnim News Agency reported on May 21 (local time) that the Natanz uranium enrichment complex, Iran's key nuclear enrichment facility, was attacked by the U.S. and Israel. The Israel Defense Forces (IDF) told the Jerusalem Post that "the Natanz attack was a unilateral U.S. operation and we were not aware of it." This was the second strike on the Natanz nuclear facility, following the first on May 1.

Iran retaliated immediately. On the same day, it launched missile strikes on Dimona and Arad, cities near Israel's nuclear facilities, causing 115 casualties. Dimona is just 13 kilometers from Israel's nuclear facility, and Arad is 40 kilometers from Dimona. Both cities are adjacent to Nevatim Air Base, one of Israel's largest air force bases.

Israeli Prime Minister Benjamin Netanyahu said "tonight was a very difficult night" but added "we will continue to strike our enemies on all fronts," signaling an expansion of the conflict.

However, the International Atomic Energy Agency (IAEA) announced that no abnormal radiation levels were detected in the attacked areas. IAEA Director General Rafael Grossi urged "maximum military restraint around nuclear facilities."

World's Largest Private Equity Firm 'Shaken' — Flagship Fund Posts First Loss

Blackstone's flagship fund recorded its first loss in four years, sounding alarms across the global private credit market. Opaque disclosure practices combined with surging oil prices from the Iran war are accelerating investor withdrawals.

The Financial Times reported on May 21 (local time) that Blackstone's unlisted private credit fund BCRED posted a 0.4% loss last month — the first since September 2022, when the Federal Reserve was rapidly raising interest rates. The primary cause was sluggish growth at Medallia, a customer experience management software company that is a borrowing client. Blackstone marked down Medallia's loan value by 16 percentage points over one year. Earlier this month, investors requested a total of $3.8 billion in redemptions. The FT assessed that "BCRED's loss after more than three years of positive returns signals the beginning of structural cracks in the $2 trillion global private credit market."

Opaque disclosures by some fund managers also came under scrutiny. The Wall Street Journal pointed out that Cliffwater, an alternative investment specialist, listed more than 3,600 holdings in an incomprehensible manner and kept a fund alive without explanation after previously announcing its liquidation, eroding investor trust.

Surging oil prices from the Iran war added another headwind. Bloomberg noted that rising oil prices are making interest rate cuts more difficult and increasing manufacturing cost burdens, raising the risk of loan defaults across the corporate sector.

Goldman Sachs CEO David Solomon urged rigorous risk management, saying "this is a reminder that credit cycles have not disappeared." Former Goldman Sachs CEO Lloyd Blankfein also warned that "it smells similar to the global financial crisis." JPMorgan downgraded the collateral value of software company loans held by private credit funds. Stoneridge Asset Management, inundated with redemption requests, said it would return only 11% of requested amounts.

Robots Run Marathons Too… Beijing Is Training

As China ramps up mass production of humanoid robots, the Beijing Humanoid Robot Innovation Center is in the midst of rigorous training ahead of a robot marathon next month.

When Seoul Economic Daily visited the Innovation Center's test zone in Beijing's Yizhuang Economic-Technological Development Area on May 20, humanoid robots were running on treadmills. Robots must maintain stationary walking for 30 seconds without deviating more than 50 centimeters laterally, then pass an endurance test of walking for 30 minutes and running for 20 minutes on a treadmill — repeated twice — to qualify for the Beijing Robot Marathon in April.

The Innovation Center is a private company that opened in January last year with government support to handle the entire process from humanoid robot R&D to mass production under one roof. The six-story building on a roughly 9,600-square-meter site has a systematic division of labor by floor: a smart logistics warehouse on the first floor, testing on the second, and assembly on the third. Dozens of robots already transport parts in place of humans in the logistics warehouse, achieving logistics accuracy above 99%.

Each completed robot must pass more than 640 inspection items before shipment, with testing alone taking eight hours. Current daily output is about eight units, but the company aims to mass-produce 5,000 units annually this year by increasing automation.

Challenges remain, however. While the AI brain was developed in-house, some critical components such as semiconductors still rely heavily on overseas suppliers. An official said "we are expanding cooperation with domestic component makers to gradually increase self-sufficiency."

D-1, the Fateful 48 Hours! Trump's 'Devastation' vs. Iran's 'Divide and Conquer' — Who Wins?