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Sensemaker: Cap in hand

Sensemaker: Cap in hand

What just happened

Long stories short

  • George Osborne held secret talks with the Greek PM about returning the Elgin Marbles from the British Museum, according to a Greek newspaper. 
  • England’s Raheem Sterling flew home from Qatar after an armed intruder broke into his home. 
  • South Africa’s President Ramaphosa faced calls to stand down over the theft of cash from his farm two years ago.

Cap in hand

Russia says it won’t sell oil to anyone participating in the $60-a-barrel EU / G7 oil price cap scheme that comes into force today. But it will go on selling to countries that pay market prices, “even if we have to cut production a little” (emphasis added).

So what? Fair question. You wouldn’t expect Russia to welcome a complex global effort to starve it of the oil revenues funding its efforts to destroy Ukraine. But the Kremlin’s irritation and the two words “a little” suggest the price cap might just work. 

The point of the cap. Since the start of the war Russian oil and gas revenues have totalled nearly €200 billion at an average of €839 million a day. That is

  • nearly double their level last year;
  • roughly twice Russia’s estimated €100 billion in military spending in the first seven months of the war;
  • a net gain in federal tax revenues compared with 2021 in the first three quarters of 2022 alone, despite a 24 per cent reduction in EU reliance on Russian gas since February. 

Russia’s war is more than paying for itself by driving up the price of fossil fuels, despite sanctions and the steep discounts it’s offering customers like China and India to get round them.

Oil accounts for roughly three times as much of Russia’s export earnings as gas. Hence the urgent need to cut its oil revenues without achieving the opposite by cutting global supply and driving prices even higher. Hence the cap.

How it’s meant to work. The scheme announced simultaneously by the EU and the US Treasury on Friday has two main components:

i) an EU embargo on ship-borne Russian oil with an exception for Hungary, which can continue to buy Russian oil arriving via the Druzhba pipeline; and

ii) a $60-per-barrel cap on the price paid for ship-borne Russian oil by anyone else wanting to use shipping insurance or trade finance provided by the EU and G7 – which between them account for 90 per cent of these services. 

Anyone paying more won’t get blue-chip insurance. This is the scheme’s main enforcement mechanism.

The architects of the scheme knew China and India (the world’s biggest and third-biggest oil importers) wouldn’t be signing up. But they hope Beijing and Delhi will use the cap to drive down what they pay for Russian oil. 

Why it might not work. Where to start?

  • Ghost fleets. Russia has spent billions acquiring an estimated 100 tankers and crews willing to operate without insurance underwritten by the London-based International Group of Protection and Indemnity Clubs, which covers 95 per cent of the global oil shipping fleet.
  • Russian insurance. The state-controlled Russian National Reinsurance Company has become the main insurer for Russia’s own tankers, Reuters reported earlier this year, and is offering cover to non-Russian vessels too. 
  • Fickle markets. If Russia cut its oil output more than “a little” (see above), and/or OPEC+, which counts Russia as a member, agreed an overall output cut in response to the cap, world prices would rise and Moscow could continue funding its war even while selling fewer barrels. 

The EU and G7 hope the $60-a-barrel cap agreed on Friday will be high enough to persuade Russia to continue selling to countries that comply with it, Moscow’s initial bluster notwithstanding, and low enough to limit Russia’s earnings should prices rise again. 

It won’t limit them much now because $60 is only $1 less than the current market price of Urals crude. Only the EU embargo can be relied on to dent Russian earnings, but how much depends entirely on keeping world prices low by keeping overall output stable.

Which is why Venezuela’s Nicolás Maduro and Saudi Arabia’s Mohammed bin Salman are the G7’s new best friends.  


Sunak’s “small boats” fixation is an unsettling echo of Trump’s Wall

Matthew d’Ancona

“Taking back control” of the UK’s borders means recognising that control is not a trophy but a responsibility. It also means speaking unwelcome truths to the British public.


Crispin Odey

Crispin Odey is one of Britain’s richest men and best-known hedge fund managers. Last year, he was cleared of sexual assault; the judge said he left the courthouse with “his good character intact”. Four more women have now come forward with similar allegations that Odey, a major donor to the Conservative party, sexually assaulted them. Other women allege that he sexually harassed them at the offices of his Mayfair hedge fund company. Tortoise asked Odey to give his side of the story, but he replied only to say there were “falsehoods” and “inaccuracies” in the allegations. Listen to this week’s Slow Newscast: Octopus: the allegations against Crispin Odey in the Tortoise app or wherever you get your podcasts


Holy grail of robotics

A real everyday purpose for advanced robotics may be at hand at last. The WSJ says it’s a robot arm called the Sparrow being trialled by Amazon in its warehouses. The Sparrow uses AI, state-of-the-art servo motors and an advanced array of grippers to pick things up. To do this with as much precision and discretion as a human is extraordinarily hard, but the goal is worthwhile for warehouse managers because robots don’t need wages, pensions or workers’ compensation payments when they get repetitive stress injuries. This story may be of limited interest to non-warehouse people, but it shouldn’t be. Exactly the same skills are needed for the real holy grail of robotics – loading and unloading the dishwasher. 

The 100-year life health, education AND GOVERNMENT

Assisted dying inquiry

The UK’s health and social care select committee announced this morning that the Commons will hold its first inquiry into assisted dying. The goal: to bring together medical professionals, campaigners and evidence from countries where prescribing life-ending medication to terminally ill people is already legal, in order to examine the UK’s current blanket ban. Why now? Assisted dying legislation has been introduced in Westminster before (in 2015 and 2021) and not passed. But this summer, there was cross-party support for an inquiry after a parliamentary petition set up by campaign group Dignity in Dying picked up 155,000 signatures and vocal campaigners called for one. To note: Scotland, Jersey and the Isle of Man are all in the process of consulting on, or drafting, their own assisted dying bills.  

Our planet CLIMATE AND geopolitics

End of zero Covid?

It looks like the beginning of the end of zero Covid in China. Beijing commuters this morning boarded buses and underground trains without having to provide a Covid test taken in the previous 48 hours. At least 15 other cities no longer require a negative test to board public transport, while Shanghai, China’s financial hub, will remove Covid testing requirements for people to enter most public places from tomorrow. Urumqi, where a deadly fire sparked nationwide anti-lockdown protests, has reopened supermarkets, hotels and restaurants. Stock markets were happy: the renminbi rose to a 12-week high against the dollar this morning. 


Iran’s morality police

In September, 22 year-old Mahsa Amini died after being arrested by Iran’s morality police for allegedly not wearing her head covering correctly. Her death sparked nationwide protests that have shaken the country for the past three months. Now, the country’s attorney general says the morality police will be abolished and that the government is reviewing the law on the compulsory hijab. It could be a signal the regime is rattled. But observers are wary; responsibility for the morality police lies with the interior ministry, not with the judiciary – something that was pointed out by Iranian state media. In any case, many protesters have moved beyond hijab complaints to call for complete regime change. To watch: a three-day strike is scheduled for this week. 

And finally … with a 3-0 victory over the champions of Africa, Senegal, Gareth Southgate scored his sixth tournament knock-out game win – the same number England scraped together from 1968-2016. You read that correctly. From 1966 until Southgate took charge, do-or-die games in tournaments were a vortex. The wins were: Paraguay (1986), Belgium, Cameroon (both 1990), Spain (1996), Denmark (2002) and Ecuador (2006). In the knock-out rounds of three competitions from 2018-2022 England have beaten Colombia, Sweden, Germany, Ukraine, Denmark and now Senegal. They were semi-finalists at the 2018 World Cup and beaten finalists at Euro 2020. Here comes the ‘but.’ On Saturday evening England confront the reigning world champions, France, in a quarter-final that matches a free-scoring collective against a prolific individual. England have struck 12 times in four matches. France’s Kylian Mbappe, 23, has nine goals in 11 World Cup appearances – five already in Qatar. Who will prevail: England’s goal-scoring committee or the brilliant soloist who evokes Thierry Henry?

The week ahead


5/12 – Deadline for Conservative MPs to tell CCHQ if they want to stand in the next election; Gordon Brown’s report on constitutional reform due to be published, 6/12 –  SNP MPs choose new Westminster leader; Christian Dior dress worn by Elizabeth Taylor at 1961 Oscars to be sold at London auction, 8/12 – Government to publish decision on the future of the Whitehaven coal mine, 9/12 – Royal Mail workers on strike. 


5/12 – EU embargo on imports of Russian crude oil by sea comes into force; Belgium’s biggest criminal trial opens of suspects in the March 2016 jihadist attacks, 6/12 – Public memorial service in China for late leader Jiang Zemin; Georgia Senate runoff, 7/12 – UN Cop15 biodiversity summit opens in Montreal, hosted by Canada and China, 8/12 – European Defence Agency annual conference; Netflix releases ‘Harry & Meghan’ documentary, 9/12 – World Cup quarter-finals kick off in Qatar. 

Thanks for reading. Please tell your friends to sign up, send us ideas and tell us what you think. Email sensemaker@tortoisemedia.com.

Giles Whittell

Additional reporting by Paul Hayward, Jessica Winch and Phoebe Davis. Graphic by Katie Riley.

Photographs Getty Images

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