Will a New Price Cap on Russian Oil Work?

Happy Wednesday! Wake up this morning with an extra spring in your step? Does the brisk December air seem fresher than ever? The 2022 midterm elections are finally over!

Quick Hits: Today’s Top Stories

  • Election decision desks projected Democratic Sen. Raphael Warnock will win reelection to the Senate after defeating Republican Herschel Walker in Georgia’s runoff election on Tuesday. Warnock led Walker 51.4 percent to 48.6 percent with more than 95 percent of the vote counted, and his victory will give Senate Democrats a 51-49 advantage in the chamber. Walker conceded the race in his Election Night remarks.
  • One day after Russia’s Defense Ministry announced it had shot down Ukrainian drones that had targeted two military airfields in Russia, another drone struck an airfield in Russia’s Kursk region, about 60 miles from the Ukrainian border. Ukraine did not claim responsibility for the strike. 
  • Five Iranian protesters accused of killing a plainclothes militiaman have been sentenced to death, Iranian officials said Tuesday. The sentences, which can be appealed, are the latest batch to be handed down during the ongoing protests over the death in police custody of 22-year-old Mahsa Amini. Thousands of protesters have been arrested and—according to Amnesty International—at least 28 are facing charges that risk sentences of execution. Hundreds have also been killed in clashes between security forces and protesters.
  • A Taiwanese chip manufacturing giant announced Tuesday it would double down on an investment in new semiconductor manufacturing facilities in Arizona, adding plans for a second fabrication plant in addition to a Phoenix one slated to open in 2024. President Joe Biden touted the announcement as evidence that the CHIPS and Science Act—the chipmaker subsidies law passed this summer—is working to bolster U.S. tech manufacturing, but many experts warn U.S. access to critical chips remains overly dependent on Taiwan.
  • Arizona Rep. Andy Biggs announced Tuesday he would run for speaker of the House, making him the first Republican to formally challenge Minority Leader Kevin McCarthy for the seat. The Republican conference voted 188-31 to nominate McCarthy over Biggs—the former chair of the House Freedom Caucus—in November, but even a handful of Republican defections to Biggs in next month’s vote of the full House could block McCarthy from securing the 218 votes he needs to secure the gavel.
  • Outgoing Nebraska Gov. Pete Ricketts announced Tuesday he’ll seek the Senate seat currently held by Sen. Ben Sasse, who is stepping down next month to become president of the University of Florida. Ricketts is widely expected to get the seat, a decision that rests with incoming Gov. Jim Pillen, whom Ricketts endorsed during this year’s Republican primary. Sasse wouldn’t have been up for reelection until 2026, but a special election will take place in 2024 to fill the last two years of the term.
  • The January 6 select committee, which is winding down its investigation as Republicans prepare to take control of the House, will recommend criminal charges to the Justice Department, committee chair Bennie Thompson told reporters Tuesday, although he said that “we have not made a decision as to who” they will recommend be charged. It would ultimately be up to the Justice Department to decide whether to act on the committee’s recommendations, which are not binding.
  • The Trump Organization was found guilty in a Manhattan court Tuesday of multiple charges of falsifying records and tax fraud. The decision comes a year after former CFO Allen Weisselberg pleaded guilty to 15 tax-related offenses and could lead to up to $1.6 million in fines for the company. Donald Trump and his family were not charged in the case.
  • German law enforcement arrested at least 25 people Wednesday in what authorities there said was a QAnon-inspired plot to overthrow the government. The group was planning violent attacks on government institutions, including Germany’s parliament, and began organizing in November 2021.

The West Debuts its Shiny New Oil Price Cap

A Liberian-flagged oil tanker transfers crude oil from the Russian-flagged oil tanker in May 2022. (Photo by Angelos Tzortzinis / AFP) (Photo by ANGELOS TZORTZINIS/AFP via Getty Images)

There’s a geopolitical squall brewing in the Turkish straits. 

Instead of passing through on their way to and from the Black Sea, about 20 oil tankers are sitting at anchor while their insurance companies duke it out with the Turkish government over whether the country can require guarantees of insurance coverage even in the event of sanctions violations as a condition of passage through its waters.

The tanker pileup isn’t yet large enough to rock the global oil market, but it’s an early unexpected consequence of the new Russian oil price cap set by the G7 group of democracies last week. The cap is a bid to undermine the Kremlin’s roughly $20 billion a month oil profits while keeping Russian oil on the market to avoid a punishing energy price spike. After a grace period for cargoes already underway, companies can handle Russian seaborne crude without consequences only as long as it’s purchased at or below $60 a barrel. Those that violate the cap face a 90-day ban from managing seaborne Russian oil or petroleum products. The European Union also largely swore off Russian seaborne crude on Monday.

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