Chapter 1: What is the main topic discussed in this episode?
Good morning from the Financial Times. Today is Thursday, May 28th, and this is your FT News Briefing. Oil prices continued their rollercoaster ride yesterday, and Ukraine's drone production could be turning the tides of the war. Plus, consulting startups are launching a formidable challenge to the big four, all thanks to AI. I'm Sonia Hudson, and here's the news you need to start your day.
Oil traders think the U.S. and Iran are getting closer to a deal. Yesterday, Iranian state TV broadcast details of a proposal to extend Tehran's ceasefire with the U.S. and reopen the Strait of Hormuz. Brent crude fell as much as 5% yesterday.
Chapter 2: What recent developments are impacting oil prices?
The proposal included a commitment to restore shipping to pre-war levels within a month and an American promise to lift a naval blockade on Iranian ports. The White House, however, called the report a, quote, complete fabrication. The tides could be turning in the war in Ukraine. Russia adopted a law yesterday that allows the central bank and other financial institutions to shoot down drones.
Now, this comes after Ukraine has stepped up its strikes thanks to a surge in domestic drone production. Ukraine's turnaround has challenged the long-held conventional wisdom that Russia's bigger army can outlast Kiev. Here to tell us more is the FT's chief Ukraine correspondent, Chris Miller. Hey, Chris.
Hi, Sonia.
So give us a sense of scale here. How much has Ukraine grown its drone supply?
Well, if you look at 2022, when Russia first launched its full-scale invasion, drones were being used by the dozens or by the hundreds, right? Mostly for surveillance and reconnaissance. But they hadn't really created what they are doing now in turning them into weapons and having them carry bombs and really... industrializing and revolutionizing modern warfare as we know they are now.
And many of these drones are what we are seeing used against Russian forces in the battlefields of eastern Ukraine here and far beyond the front line.
Right. And that's why Russia is allowing these financial institutions to defend themselves against drones, like I mentioned earlier. How has Ukraine been able to ramp up its drone production on such a large scale?
Well, in the sort of spirit of mass mobilization here, companies that made household appliances or companies that were involved in the steel industry have now refurbished their production lines to produce parts for weapon systems and drones. There are Saturday night house parties now where people will get together and make dinner and wine and then put together drinks.
FPV or first person view drones. And so we're seeing it done on small hobby scales, but also on this greater industrial scale, thanks not only to its resources and capacity here, but to Western partners, particularly Europe, which has provided billions of dollars recently.
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Chapter 3: How is Ukraine's drone production changing the dynamics of the war?
It's just taking less time. And then the third issue is around expertise. Clients can use AI themselves for the first layer of analysis often. They're increasingly needing consultants more for deep specialist knowledge. So that plays more to the strengths of boutique firms because they're already very focused on a particular area.
The big firms have specialisms too, of course, but they'll need to move more in that direction of developing those deep, deep specialisms.
Well, how are big four firms responding to these threats?
So in a couple of different ways, the main one is investment. They're investing huge sums of cash, billions globally, into building their own AI models, training their people on AI. They also, because they're significant firms, they have the pull to forge alliances directly with OpenAI and Anthropic, which is hugely attractive for clients.
Another thing that they're doing is they're changing their pricing model. So they're moving towards subscription or success-based pricing, which is a difficult transition, but will change the way that they handle things.
How big of a disruption do you think these smaller firms that we're seeing this rise in will ultimately be for the big four?
We don't yet know how much market share the small firms will manage to grab. That's the key question. There's still limited hard evidence that AI has already transformed the sector at scale. Clients are really loyal to established brands. But the smaller challenges are led by real sector veterans, and they have repeatedly vowed that they can take market share.
So if AI does continue to reduce the importance of shared headcount, size, and scale, then the barrier protecting the incumbents will probably weaken over time.
Elisheva Kissin is the FT's accountancy correspondent. Thanks, Elisheva. Thank you. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news.
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Chapter 4: What scale of drone production has Ukraine achieved?
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