5th September 2022
Bite-sized business news from the UK and beyond
After 11 candidates, two months of campaigning and 160,000 votes the new Conservative leader and therefore prime minister will be announced at 12.30pm today. Relive the most memorable moments of the contest here.
G7 agrees price cap on Russian oil
Disney plans to go prime
ENERGYG7 agrees price cap on Russian oil
What happened?On Friday the G7 announced an agreement to impose a cap on the price of Russian oil imports, despite Russian threats to cut off any country that tries to sabotage its energy business.How did we get here?The group of wealthy countries includes the UK, US, Canada, France, Germany, Italy and Japan and have been staunch critics of Russia’s war in Ukraine. It announced its intention to institute a price cap back in June to cut Russia’s oil profits, hurt its war efforts and lower global energy prices—now they are making good on that plan with a formal agreement.
The projected start date for the price cap is now December 5, the same day that the EU will begin its partial ban on Russian oil imports.
To enforce the cap, London-based ship insurers (which cover about 95% of the world's oil tankers) would not be permitted to insure any vessels carrying oil sold above the cap price.
Why it matters: Despite the coordinated efforts of Western nations, Russia has still been raking in money to fuel its war machine thanks to its energy exports. A global ceiling on the price of Russian oil could put a stop to this.What’s next: The G7 said the price the cap will be set at is still TBD, but would be determined by a range of technical inputs and consultations with other countries who might want to join.
Officials are crossing their fingers that China and India might want to get in on the price-fixing action, as the plan will be significantly less effective if Russia can still sell at full price to those markets.
Yes, but: Analysts have pointed out that there are ways Russia could get around the cap by using tankers insured by non-Western brokers to sell oil to non-G7 buyers.Russia has also said it won’t sell oil to any country that observes the price cap anyway—whether or not it can make good on this threat will likely depend on how many countries agree to join in.Meanwhile, state-owned energy giant Gazprom announced the Nord Stream 1 gas pipeline—a key supplier of natural gas for Europe—would not re-open on Saturday- as expected due to (they claim) maintenance problems.
Other stories to keep you in the loop
LEISUREDisney plans to go prime
What happened?According to The Wall Street Journal Disney is in the early stages of developing a product that would tie together its streaming services, theme parks, resorts and merchandise in one package similar to Amazon Prime.The bundle would also include discounts and exclusive perks, potentially offering subscribers everything from limited-edition lightsabres to discounts for Disney Broadway shows.Why it’s happening: A Disney membership could boost revenue by luring its most loyal customers into spending even more while also giving the company access to a trove of valuable user data. CEO Bob Chapek has been adamant about cross-selling to customers and has championed the company as a “unique synergy machine” that has many different avenues to reach people.The move is part of Disney’s broader strategy to focus on maximizing the value of its biggest fans rather than appealing to a broader, but less lucrative, customer base.The approach is already yielding results in Disney’s parks which are making more money than ever (despite having fewer guests) after the company increased the price of nearly everything.Big picture: Disney already has a wide array revenue streams from residential communities to startup accelerators but knows it has to be much more than just an entertainment company to satisfy shareholders.
Stat of the day
The UK slipped behind India to become the world’s sixth biggest economy
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