![An oil tanker is moored at the Sheskharis complex, part of Chernomortransneft JSC, a subsidiary of Transneft PJSC, in Novorossiysk, Russia, Tuesday, Oct. 11, 2022, one of the largest facilities for oil and petroleum products in southern Russia.](https://media.guim.co.uk/1e93512aaec4e37e8217229de97e98d63559b239/0_166_4969_2982/1000.jpg)
Good morning. From today, an EU and G7 price cap of $60 a barrel for Russian oil will put unprecedented new limits on Vladimir Putin’s ability to fund his war machine. Meanwhile, a ban on importing any Urals oil within the EU will further limit the market for Russian crude. This might sound technical and obscure. But taken together, the two measures are arguably the biggest intervention by buyers in global oil markets in modern history.
As significant as they are, these steps raise many questions. Will they increase overall global oil prices – which rose slightly this morning - and push inflation further up? Will countries like China and India fall in line? And will they really hit Russia where it hurts – or do they fall short of what’s needed to have an impact on the ground in Ukraine? Today’s newsletter, with the Guardian’s diplomatic editor Patrick Wintour, is about what the key players want the strategy to achieve – and how Putin might react. Here are the headlines – and for the details of England’s victory over Senegal in last night’s knockout match, scroll down to the World Cup section.
Five big stories
Inequality | People in the UK are getting “sicker and poorer”, with a worsening health and wealth divide between regions, research has found. New data shows that sickness is twice as likely to force people out of work in the north-east of England, Wales and Northern Ireland as in London and the south-east.
Policing | Metropolitan police officers in schools are to be monitored to see if they are disproportionately targeting black children. The initiative is part of a package of new measures which London mayor Sadiq Khan says will reduce racial disproportionality in the use of police powers.
Strikes | The Conservative party chairman, Nadhim Zahawi, has been accused of insulting NHS workers with a “ludicrous” suggestion that it is the wrong time to strike over low pay because it would help Vladimir Putin divide the west.
Strep A | The UK government has urged parents to be vigilant for signs of a rare invasive form of strep A infection, after it was reported that a 12-year-old schoolboy from London was the latest person to have died after contracting it.
Immigration and asylum | Locking up people who enter the country illegally and barring them from settling in the UK are “options” under consideration as the government puts a crackdown on “small boats” at the heart of its agenda. The ideas are set out in a new thinktank report with a foreword by home secretary Suella Braverman.
In depth: ‘It’s very hard to find agreement on measures that will really hit Russia’
![Vladimir Putin attends the 10th National Congress of Judges, in Moscow.](https://media.guim.co.uk/604d3343a732f7b2c8712d886827541b30c49cc3/0_40_2214_1328/1000.jpg)
After Russia invaded Ukraine, the US and EU acted to bring in an unprecedented set of sanctions designed to limit the country’s ability to wage war. But because of Europe’s heavy reliance on Russian oil and gas, it moved more cautiously on energy than in other areas.
As Moscow found alternative buyers to replace the decline in orders from Europe, Russian crude oil exports held up. “There’s been a lot of short-term oscillation,” Patrick Wintour said. “But there’s not been a huge long-term change. They’re still raking in a huge amount of revenue.”
That is the backdrop to the interventions finally agreed by EU countries that are set to come in today after they were initially proposed in May. They include a ban on maritime imports of Russian oil, and a price cap – together with the G7 nations and Australia – that would apply to any country wishing to use European insurance or shipping.
But the plan has to serve two goals that are clearly in tension, Patrick said. “On the one hand, it has to reduce Russian revenue. But it also has to protect the global economy and keep inflation under control.”
Now that the EU has agreed to a $60 limit, here’s a guide to how the key players have been thinking about that balance.
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The US, EU leaders, and the G7
Before the war and the coronavirus crisis, Russian crude oil typically sold for between $55 and $65 a barrel. In that context, a cap of $60 looks conservative. That reflects the influence of Brussels and the US in shaping the decision, Patrick said. “The issue for them is, you don’t want the Russians to pull the plug altogether. You need it to be worth it for them to sell the oil, but you want to limit their profits.”
Another upward pressure on the agreed cap: the influence of Greece and Malta. “They have big oil tanker industries, and when the negotiations started, they were arguing for a price of around $80,” Patrick said.
The other main intervention coming into effect today – the ban on maritime imports to EU nations – will have a limited impact. “At one point, it felt like the US was pushing the cap because it thought that ban would lead to a massive spike in the price of oil. But now there are so many carve-outs it is less consequential.”
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Poland, Estonia, and other Baltic states
The Baltic states closest to the conflict have argued for a much lower cap. “A group of countries led by Poland and Estonia say that it should be well below $60 – they argue that anything above about $45 is giving Russia a profit. Poland was arguing for around $30, and Estonia has backed the Poles,” Patrick said. Meanwhile, Volodymyr Zelenskiy was critical of the $60 cap at the weekend, calling it a “weak position”, and noting that the difference between $30 and $60 a barrel was about $100bn a year.
That disagreement has led to intensive US lobbying – and while Poland and Estonia might be smaller nations and economies, they wield significant influence because of the need for EU unanimity.
“The pressure applied to the Estonians from the Americans has been quite extraordinary,” Patrick said. “But they have really held out.” The deal that was eventually struck came after Poland secured a mechanism which would see the level of the cap reviewed every two months, with the aim of setting the cap at least 5% below the market price for Russian crude.
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India, China, and other global buyers
![A container vessel is anchored at the ‘Jade Weserport’ container terminal in Wilhelmshaven, Germany, last month.](https://media.guim.co.uk/3d5b74bcb89f9aae6e91970a414d5b1c213648f1/0_7_8386_5035/1000.jpg)
As European demand has fallen, Russia has been able to make up a lot of the shortfall in revenue by selling more oil to other countries, with India and China among the largest new buyers. One crucial question about the efficacy of the European cap is whether those countries will abide by it.
You might think that other buyers would be delighted at any move which means they get cheaper oil – but they will also be considering the strategic downside of alienating Russia. Still, the EU and US wield a useful tool: any country importing oil needs to insure its transportation, and find the shipping in the first place. The rules enforcing the cap state that no European insurance firm or shipping company can be involved in a deal at a higher price.
“UK firms provide about 95% of the insurance for oil shipping,” Patrick said. “So the theory is that that will limit purchases at a higher price. But the British insurance industry doesn’t want to lose what is effectively a monopoly.”
With six months since the policy was first announced, there is a possibility that alternative insurance suppliers, perhaps Russian, could appear. “But it’s a very sophisticated market,” Patrick said. “It isn’t clear that they have been able to do that.”
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Opec and other global sellers
It has been clear since Saudi Arabia rejected Joe Biden’s entreaties to increase oil production in October that major oil producers, particularly the 13 Opec member states, are unwilling to bring the price down to suit western interests. “They are very opposed to third party interventions,” Patrick said. The US has sought to mitigate the impact of Opec’s stance by releasing large quantities of oil from its Strategic Petroleum Reserve. “But that stock is running down quite fast, and its ability to do the same in future is going to be less.”
Sure enough, at a meeting of Opec+ on Sunday – the Opec countries with other oil producing nations including Russia and Venezuela – member states stuck to their guns, and agreed to maintain their existing output targets. But it reserved the right to take “immediate” action to stabilise markets “at any time”.
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Russia
As ever for Ukraine’s western allies, the most difficult unknown is how far Vladimir Putin is prepared to go to hurt his enemies. The fact that Russia has been working to put in place alternative insurance options – and has sought to acquire about 100 tankers for a “shadow fleet” to transport its oil if others will not – suggests that a total cut-off is unlikely. But there are other significant questions hanging over the decision on the cap.
“There’s a finger in the wind element to this,” Patrick said. “Nobody is absolutely sure of the real price Russia is paying to produce a barrel. And you can’t predict worldwide demand.”
In the end, he said, caution over cutting off supplies completely are likely to mean that the cap has fewer teeth than initially hoped. “If it is set at a price that the market is currently bearing, it’s going to be a pretty nugatory effect,” he said. “You might see it as slightly pointless. But it is very hard to find agreement on measures that will really hit the Russian war machine.”
What else we’ve been reading
Made.com was a stunning e-commerce success story, capitalising on a millennial appetite for affordable luxury furniture to pass £1bn in total sales by its tenth birthday. Now it has collapsed. For the Observer, Amelia Tait wrote the fascinating, sad story of how Made was undone. Archie
As people get older, the latent, societal pressure to find someone and settle down only grows. But finding love does not have a time limit, as Virginia Lynch found out when she met the love of her life at 72. Paula Cocozza spoke to Lynch about how her life has changed since meeting Alan. Nimo
Nell Frizzell made me feel less alone in her brilliant piece about an addiction to property websites. In an age where many people cannot afford to get on the property ladder in the first place, mindlessly browsing online might be the closest we get to owning a home. Nimo
As Vanessa Feltz starts a new show at TalkTV, Chris Godfrey speaks to her about life as tabloid fodder, dealing with antisemitism, and the freedom and sadness of leaving the BBC. As he says, it “feels like the quintessential Feltz experience: loud, camp, slightly combative but extremely entertaining”. Archie
The spectre of lost luggage is one of the worst parts of travelling – Caitlin Cassidy spoke to one passenger about his four month battle to get his bags back. Nimo
World Cup
![Jordan Henderson celebrates with Jude Bellingham after scoring England’s first goal.](https://media.guim.co.uk/4e3d8d2be15d9d89dff53228a215534f021c3dea/0_125_6922_4153/1000.jpg)
After a tricky first half-hour, England swept to a comfortable 3-0 victory over Senegal in Sunday night’s last-16 match, with goals from Jordan Henderson, Harry Kane, and Bukayo Saka enough to set up a quarter-final against France on Saturday night. Gareth Southgate praised his young side, saying: “the biggest thing is the mentality … they all stepped up.” Jude Bellingham finished top of Jacob Steinberg’s player ratings, while Barney Ronay wrote that Bellingham was “magnificent” in England’s “difficult moments” and asked: “Has there been a more rounded, more compelling central midfielder on Qatar’s lighted stages in the opening four games of this World Cup?”
There was alarming news about Raheem Sterling, who returned to the UK from Qatar after armed intruders broke into his family home. Southgate said he would be allowed “as much time as he needs” to spend with his children.
In yesterday’s other last-16 tie, France overpowered Poland 3-1 thanks to a goal from Olivier Giroud – making him his country’s all-time top scorer – and two stunning strikes from Kylian Mbappé. Ben Fisher wrote that “even on Giroud’s big night, the masterful and electric Mbappé was able to muscle in on the headlines.” In today’s matches, Croatia take on Japan, while Brazil play South Korea, two fixtures in which, Scott Murray writes, “the World Cup could finally be Asia’s oyster”.
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The front pages
![Guardian front page 5 December 2022](https://media.guim.co.uk/ec8c3f58dfc4504051119e185574742296ea8a75/0_0_1400_1775/789.jpg)
The Guardian headlines “‘Sicker and poorer’: report reveals Britain’s widening health divide”. The story says upcoming research shows people in the north-east of England, Wales and Northern Ireland are twice as likely to be forced out of work by sickness as people in London and England’s south-east.
The Times leads with “Midlife health checks go digital”, while the i says “Energy firms target homes in fuel poverty”.
The Financial Times reports on a shift in EU state aid rules: “Brussels promises help for companies to offset impact of US green subsidies”. The Telegraph says “Rail union refuse to save Christmas” with the news that the RMT has rejected the latest pay and jobs offer.
The Mirror focuses on England’s World Cup win again Senegal with “Dream world”, while the Sun covers Raheem Sterling’s sudden departure from Qatar with “Raheem raid terror”.
Today in Focus
![PPE products and Entrepreneur Michelle Mone is admiited to the House of Lords as Baroness Mone of Mayfair, after being made a Tory peer](https://media.guim.co.uk/fa4c1f9c2e8d3d867427762814fcbfdd99972940/0_0_5000_3000/1000.jpg)
Michelle Mone lobbied for PPE Medpro. But was she enriched by its profits?
Michelle Mone is in the headlines after a company called PPE Medpro was awarded contracts worth more than £200m during the pandemic. David Conn, the Guardian’s investigations correspondent, tells Nosheen Iqbal what he has discovered about Mone’s links to the firm.
Cartoon of the day | Edith Pritchett
![Edith Pritchett / The Guardian](https://media.guim.co.uk/30ff01f8fd39d983673c317b09d0efa65ce9c916/0_0_1980_1346/1000.jpg)
Sign up for Inside Saturday to see more of Edith Pritchett’s cartoons, the best Saturday magazine content and an exclusive look behind the scenes
The Upside
A bit of good news to remind you that the world’s not all bad
![Illustration](https://media.guim.co.uk/767036e2916c2f5995a29c0b368d62cda721ed86/0_0_4283_5480/782.jpg)
Being charitable, kind and generous with words and in action is just as good for the wellbeing and mood of the person who is giving as it for the recipient of that goodwill. Sally Howard spoke to the people who are dedicated to random acts of kindness who seek to make the world a better place in small, spontaneous ways without becoming a performative good samaritan. Vic Woods, for instance, is a 43-year-old based in Sussex, who routinely leaves money for fares taped to bus stops and flowers with heartwarming notes attached on park benches around her area. This anonymous thoughtfulness is central to both maintaining the dignity of those you are trying to help and maximising the fulfilment of those who are helping.
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Bored at work?
And finally, the Guardian’s crosswords to keep you entertained throughout the day – with plenty more on the Guardian’s Puzzles app for iOS and Android. Until tomorrow.