Fragile security

The attack underscores the vulnerability of top oil producers [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( The United Arab Emirates brushed off a deadly drone attack on its capital as a terrorist incident, saying it would have little impact on the Gulf energy exporter’s stability. While the damage was limited, however, the strikes by Yemen’s Iranian-backed Houthi rebels were a stark reminder of how vulnerable some of the world’s largest oil producers are to attack from armed groups using relatively rudimentary drone and missile technologies. Key reading: - [Deadly Drone Strikes on UAE Raise Gulf Tensions, Roil Oil Market]( - [UAE to Ask U.S. to Restore Houthi Terrorism Label After Attack]( - [Saudi Oil Output Cut in Half After Drones Strike Aramco Site]( - [Trump Isn’t Responsible for Iran’s Aggressions: Bobby Ghosh]( Already oil prices are elevated due to tightness in global supply. The danger is not lost on the UAE. It entered the Yemen war alongside Saudi Arabia back in 2015, after the Houthis swept through the north and captured the capital. But it has sought to extricate itself ever since a 2019 attack took out half of Saudi Arabia’s oil output. This month, however, saw the UAE step up its military role again. Helped by aerial bombardment from the Saudi-led coalition, a UAE-backed group has made advances in strategic parts of Yemen, drawing threats of retaliation. The Houthis hijacked an Emirati vessel in early January, and their spokesman has warned of future attacks unless it ends its involvement. The impact goes beyond the UAE. With efforts to restore the nuclear deal with Iran at a critical juncture, one of the world’s top energy-exporting regions could see a return to the broader instability that roiled markets after the U.S. withdrew from the accord in 2018. — [Lin Noueihed]( A satellite image showing smoke rising over an Abu Dhabi National Oil fuel depot on Monday. Source: Planet Labs PBC [Click here]( to follow Bloomberg Politics on Twitter and share this newsletter with others too. They can sign up [here](. Global Headlines Front lines | Across Ukraine there remains a remarkable sense of calm despite the build up of Russian forces on the border and warnings a war could come. That [absence of panic]( seems to grow the closer you get to the front, and, as [Marc Champion]( reports exclusively from eastern Ukraine, few live quite as close as Halyna Nevynna and her mother. - A Ukrainian court adjourned a hearing on the detention of former President Petro Poroshenko, who is under investigation for high [treason]( in deals with Russian-backed separatists last decade. - Russia will move forces to Belarus for drills next month amid deepening [confrontation]( with the U.S. and Europe over Ukraine. Valentyna Dzyuba and her daughter Halyna Nevynna in the yard of their home in Mar’inka, Ukraine, on Jan. 14. Photographer: Christopher Occhicone/Bloomberg Tory topplers | With U.K. Prime Minister Boris Johnson in deepening trouble over “partygate” allegations, the role of the 1922 Committee of backbench Conservative lawmakers is coming into focus on a potential [challenge]( to his leadership. [Kitty Donaldson]( explains how the party deals with leaders it wants rid of. Alarm bells | Global inflation and slowing domestic growth are key political risks to China, the top law-enforcement body said in a rare [warning]( about the economy from one of the Communist Party’s most powerful organizations. Similar sentiments were [aired]( yesterday by President Xi Jinping in an address to the World Economic Forum. - America’s National Basketball Association found itself in a China-linked [controversy]( after Chamath Palihapitiya, part owner of the Golden State Warriors, dismissed concerns over Beijing’s treatment of the Uyghur minority. Consumption by the European Union threatens to devastate carbon-rich ecosystems that aren’t included in measures to address climate change, according to the World Wildlife Fund. The proposed rules are designed to curb the destruction of woodlands spurred by demand for products from beef to palm oil. But as [John Ainger](reports [here](, they focus only on mainly forested areas, which could prompt producers to shift to other ecosystems. Shipping squeeze | Ocean shipping rates are expected to stay [elevated]( well into 2022, stoking concern that high freight costs are becoming longer-term features of the global economy. The spot rate for a 40-foot container to the U.S. from Asia topped $20,000 last year, a tenfold increase from a few years ago, with tight container capacity and port congestion adding pressure to supply bottlenecks. - Leading European metal producers called on politicians to use measures including state aid and tapping national gas reserves to ease a power crisis that has driven up energy costs and led to smelter [shutdowns](. Best of Bloomberg Opinion - [Ukraine Cyberattacks Could Spread Globally: Parmy Olson]( - [What Will It Take to Vaccinate the World? Clara Ferreira Marques]( - [When Green Camouflages Corporate Murkiness: Javier Blas]( 5G worries | Major U.S. airlines warned of “[catastrophic]( disruptions” in travel and shipping if wireless carriers deploy 5G services close to airports. Airlines for America expressed concern to Transportation Secretary Pete Buttigieg that the technology could interfere with instruments that measure an aircraft’s altitude. Bloomberg TV and Radio air Balance of Power with [David Westin]( weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - Hong Kong will cull about 2,000 small animals sold at pet stores after some [hamsters]( tested positive for Covid. - North Korea said it tested two tactical guided missiles yesterday, as it [pressures]( the Biden administration with its biggest string of launches since August 2019. - Hong Kong police [arrested]( two former Cathay Pacific Airways flight attendants for violating pandemic rules after they were identified as the source of the city’s omicron outbreak. - French Finance Minister Bruno Le Maire urged the EU to [adopt]( new rules for a global minimum corporate tax of 15% in the coming weeks, despite the skepticism of member states over the timeline. - A fourth dose of the Pfizer-BioNTech vaccine does not [prevent]( omicron infections, preliminary data from a trial in Israel shows. And finally ... Beijing has promised the world’s top athletes access to a partially unfettered internet during the Winter Olympics, dropping the Great Firewall that blocks services like Facebook and YouTube at official venues and hotels. But as [Jamie Tarabay]( and [Sarah Zheng]( report, with Chinese companies that [specialize]( in data collection, surveillance and artificial intelligence among the official sponsors and suppliers for the games, there are reasons to exercise caution. An athlete’s accommodation at the Olympic Village in Beijing. Photographer: Fred Lee/Getty Images Like Balance of Power? [Get unlimited access to Bloomberg.com](, where you'll find trusted, data-based journalism in 120 countries around the world and expert analysis from exclusive daily newsletters. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. 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