An EU ban on Russian liquefied natural gas imports starting Jan. 1, 2027 will force Moscow to find new buyers for exports from Yamal, its flagship Arctic project, and new ways to ship the gas.

Yamal’s LNG, gas that is cooled into a liquid so it can travel by ship, goes west through the Kara and Barents seas, around northern Norway and into European waters. Between January and October 2026, 81% of Yamal’s recorded deliveries were destined for Europe as companies scrambled to get ahead of the upcoming ban, according to new analysis by the NGO Urgewald. It estimates Europe’s bill for that period at €8.7 billion, already above its estimate of €7.2 billion for all of 2025.

The ban will end the long-term contracts that still tie Yamal to Europe. Russia will have to redirect the gas, most likely to buyers in Asia, and reorganize the shipping network to reach them. Longer voyages mean higher costs and fewer trips per tanker each year because of the distance.

The LNG trade “is going to look completely different,” said Malte Humpert, senior fellow and founder of the think tank Arctic Institute. The ban gives Moscow “a bigger incentive” to find another route, he said. “It’s not easy. It’s not cheap. It’s very slow,” but Russia will “figure it out.”

From black markets to new ports

An increase in black market LNG trade could be one way out. A classic shadow fleet has not been needed so far, since Yamal is not under sanctions, said Sebastian Rötters, sanctions campaigner at Urgewald.

Nor is a shadow fleet well suited to the job. They typically use old, unregistered oil tankers that can easily disguise their movements. On the other hand, there are fewer LNG carriers globally and they follow a limited number of routes, making them easier to track, said Martin Vladimirov, a senior analyst at the Center for the Study of Democracy, a think tank that follows EU sanctions policy.

One possible workaround is a “virtual swap.” Russia could sell more gas to countries such as Turkey or China, which could then sell more of their own or other countries’ gas to Europe. That would preserve Russia’s income even as its LNG is barred from European ports, Vladimirov said.

But even if Moscow finds buyers, it still has to get the LNG to them. That means Russian ships unable to access Europe will need to rebuild their logistics chains to sail farther or transfer their cargoes to other ships elsewhere before sailing on to alternative markets.

Either way, officials are already gearing up to confront the anticipated increase in black market activity. The matter requires “more attention on the European level,” said Lithuanian Energy Minister Lukas Savickas, whose government will helm the EU’s six-month rotating presidency from January.

That means a holistic approach that steps up monitoring of interconnection points, pipelines and ports across the EU rather than focusing on individual ships or companies, he said.

How far the ships have to go will be determined by who is willing to buy. If China, South Korea or Japan are the only buyers, “they have to go really far,” Humpert said, but if Moscow can sell part of the gas to Turkey, Egypt, Pakistan or Vietnam, they wouldn’t have to.

“Imagine the gas station you’ve been driving to for the last seven years, suddenly the gas station is three or four times as far away,” Humpert said. Yamal sits on Siberia’s Arctic coast. Europe was Yamal’s nearest major market, a voyage of about six to 10 days, compared with Asia, which takes much longer to reach.

East vs. West

Russia has two main ways to get Yamal’s gas to Asian buyers.

One is to sail east through Arctic waters on the Northern Sea Route. But Russia has only 15 specialized tankers capable of navigating the route in winter. They are costly to operate, so most have been used for short trips to Europe, where they can unload and return quickly, Rötters said.

Vladimir Panov, head of the Arctic Directorate at Rosatom, Russia’s state nuclear corporation, said last month it plans to send the gas east year-round, with help from a new nuclear icebreaker expected in early 2027. That will be easier said than done. Only 11 ships have made that eastward winter trip since 2018, and some returned with hull and propeller damage.

Repairs are another problem. Ships damaged in the ice can no longer be fixed in EU yards. Europe is currently the specialist in repairing icebreakers. China’s repair capacity is limited, Rötters said. The tanker Alexey Kosygin, for example, has spent an unusually long time in a Chinese shipyard after being damaged.

The other option is to sail west first. Because Russian ships cannot stop in Europe, they could transfer the gas near Murmansk from the specialized tankers to conventional carriers, which would then take it to Asia. Russia has bought an estimated 20 to 25 second-hand conventional ships for this purpose over the past year or two, Humpert said.

The shorter way to Asia would run through the Mediterranean and the Suez Canal, but Russian LNG carriers have largely avoided it since March, when the Arctic Metagaz, which was carrying gas from Russia’s sanctioned Arctic LNG 2 project, was attacked off Malta. No Russian gas has passed through the Mediterranean since, Rötters said. That leaves a route around Africa, which takes 35 to 40 days one way.

Ripple effects

That’s not to say Moscow is without options, thanks mainly to non-European companies, said Humpert, of the Arctic Institute. Novatek, the company behind Yamal, acquired two medium-ice-class vessels from a Japanese company a month ago. “I would never bet against Novatek,” he said, adding that Moscow could restore most of its Yamal LNG exports within a year or two.

Each winter voyage also gives Russia more experience navigating the frozen Arctic, Humpert said. These winter routes differ sharply from the summer routes Brussels is focused on, and Russia is currently the only country able to sail the former. What Moscow learns about ice, ships and logistics under the ban could benefit it in the future.

All this will unfold in a region the EU’s new Arctic Strategy casts as a vital part of its future trade, economic and security policy.

The effects of the ban extend well beyond Russia. At a time when the Iran war has already tightened supply, Europe will have to buy LNG elsewhere, “and most likely that LNG will be more expensive,” Humpert said. Urgewald says the benchmark price rose to €86.79 per megawatt-hour in October, up from €75.34 in September and €35 in January. Rötters said those higher prices help Moscow cover part of the cost of the longer routes.

European ports like Belgium’s Zeebrugge terminal, the largest EU destination for Yamal gas this year, will also feel the loss of that supply.

ANTALYA, Turkey — “Anything is possible if you believe,” croons Turkish pop megastar Tarkan in his theme song for this year’s global COP31 climate conference.

Attendees appear to have taken his words to heart.

The Antalya summit marks the first climate talks since the United Nations told the world global warming would soon exceed 1.5C, effectively burying the totemic Paris Agreement target that has steered COP negotiations for more than a decade.

Yet leaders here are straining to keep the goal on life support.

“We are on course to overshoot the 1.5 degree target, and every fraction of a degree matters. So we must double down,” said European Commission President Ursula von der Leyen in her speech to fellow leaders on Wednesday.

“Let’s show that the fight for 1.5C is not over,” Hilda Heine, president of the Marshall Islands told leaders.

Even before the talks began, Danish Climate Minister Samira Nawa told POLITICO her country’s priority at COP31 was “to push for keeping the 1.5C target in the heart of global climate ambitions.”

Other leaders and ministers, reviving slogans from COPs past, have exhorted their colleagues to “keep 1.5 alive” or ensure the target remains “within reach.”

But scientists say that dream is over.

The U.N. last month said that, even if countries dramatically slash planet-warming emissions starting right now, the best outcome would be a rise in global temperatures of 1.8 degrees. If they also deploy vast amounts of carbon removal tech to clean up the atmosphere, there’s a chance of getting back to 1.5 degrees after surpassing it — in theory.

In reality, though, greenhouse gas emissions are still rising and the carbon-hoovering technologies needed to achieve that reversal are unproven at scale.

The risk

The collective ambition of national climate plans, already insufficient before the U.N.’s announcement, is even weaker than projected last year. Countries that have been among the strongest proponents of meeting the 1.5-degree target are watering down efforts to achieve it.

But at the same time, many countries (and climate scientists) fear that publicly dumping the rhetoric around 1.5C will open the door to weakening global ambitions even further. Highlighting other possible targets, such as the 1.8C mentioned by the U.N., would be a “slippery slope,” warned one European climate negotiator.

“I do not support the political messaging of keeping 1.5C alive — but on the other hand, I don’t want to lose it,” said Johan Rockström, a leading climate scientist and director of the Potsdam Institute for Climate Impact Research.

“Politicians, when they say that, may naively think that we somehow still are on this linear, incremental journey that can simply take us to safety, which is not the case,” he added. “On the other hand, if we scientifically criticize it, the risk is that they do indeed say: ‘OK, let’s just drop it and aim for 2 degrees instead,’ which would be a big mistake.”

Beyond symbolism

For island nations already losing land and livelihoods to rising oceans, the 1.5 degree target is not merely symbolic. It represents their very survival.

“Our response to the threat of overshoot must be overwhelming, or the world we know is over,” said Heine, the Marshall Islands president. “Overshoot means waves eating away our shores, flooding that destroys towns, schools, hospitals. It destroys our land and ocean.”

The temperature target was not chosen arbitrarily. It represents the level of warming scientists say the planet can endure before the heat trapped in the atmosphere unleashes exponentially greater dangers.

In the Paris accord, countries vowed to limit warming to below 2 degrees and “ideally” 1.5 degrees. The second target has become so dominant that the International Court of Justice last year declared it the primary goal.

A group of developed and highly vulnerable nations, known as the High Ambition Coalition, have called for a credible response to the overshoot as one key COP31 outcome.

“There is no way we can lose that anchor, out of our moral responsibility toward the people who have contributed the least and are the most impacted,” said Christiana Figueres, who headed the U.N. climate body when the Paris Agreement was adopted.

Words vs. action

But promises have not aligned with reality.

“Leaders, and in particular those from developed countries, cannot keep expanding fossil fuel production while claiming to be committed to 1.5 degrees,” U.N. Secretary-General António Guterres told world leaders in his opening speech on Wednesday.

Yet immediately after his speech, leaders did just that.

Australia, COP31 co-hosts with Turkey, is expanding investments in coal and natural gas, even as its Climate and Energy Minister Chris Bowen urges leaders in Antalya to act with “urgency, solidarity and resolve.”

“With every minute that we fail to achieve the targets set out in the Paris Agreement, the risks and costs we face continue to grow,” said Turkish President Recep Tayyip Erdoğan. Two days earlier, he had celebrated the discovery of two new oil fields.

“The science is clear. Breaching 1.5 isn’t where we down tools and give up,” Katie White, the U.K.’s climate minister, said in response to the U.N. findings. White promised COP31 was the place to double down on action — but a day later, her own department approved a major natural gas project in the North Sea.

Meanwhile the United States, the largest polluter in world history, has withdrawn from the Paris Agreement and is no longer part of COP talks. Donald Trump’s abandonment of efforts to address global warming has left a large gap in the world’s collective efforts to cut emissions.

There’s always next year

Tina Stege, the Marshall Islands’ climate envoy, acknowledged the difficulty of the challenge. But she was unbending.

“That’s not a reason to not do everything that we absolutely can,” she told reporters. “Every country that showed up at this talk to do the work needs to do that work and more.”

Doing more means ramping up clean electrification and alternative fuels, say experts.

It also means dramatically curbing short-term climate pollutants, such as methane. That’s emerging as a possible response to the overshoot declaration in the final agreement from this year’s negotiations, according to the European diplomat cited above.

“If we cut methane by nearly half by 2030, we could avoid almost 0.3 degrees of warming by the 2040s and save 250,000 lives every year,” said Mia Mottley, the prime minister of Barbados, on Wednesday. “This buys us the time to get back to the 1.5 degrees.”

The politics are tricky. Even as technological advances have allowed for better detection of the potent pollutant, the U.S. and Europe have weakened regulations aimed at curbing methane emissions.

Mottley was adamant nonetheless that flagging global ambitions were no reason to give up.

“I call for a global movement: 1.5 billion voices for 1.5 degrees,” she said. “We need to do this before we meet at COP32 next year. … Make 1.5 impossible to ignore on the planet Earth.”

European Commission President Ursula von der Leyen announced Monday that the EU will help finance some Black Sea security costs after attacks on commercial shipping — blamed on Russia — even as the main diplomatic push to end the crisis unfolds elsewhere.

“Threats, attacks and incursions are rising off the coasts of the Black Sea,” von der Leyen said at the start of her visit to Romania.

In response, she said the bloc will “fast track the work on the Black Sea Maritime Security Hub, with a clear timeline for completion and dedicated funding of €50 million.”

She also announced an additional €10 million in EU cash for Romania’s search-and-rescue operations.

She was in Varna, Bulgaria, on Tuesday and announced an additional €10 million for Bulgarian search-and-rescue.

The sums are tiny compared to the €20 billion Romania and Bulgaria are getting under the EU’s SAFE arms loans program.

The hub, announced last year, is a joint control center to be run by Romania and Bulgaria and is expected to be fully operational by the end of the year.

It aims to monitor maritime activity in real time and safeguard vital infrastructure such as undersea power and communication cables. It would offer both countries a unified view of the sea and sky, helping them detect threats before they strike.

Monday’s announcement follows weeks of mounting violence on the Black Sea. Since early October, at least nine ships have been struck in the exclusive economic zones of NATO and EU members Romania and Bulgaria; four were sunk, and 34 sailors are dead or missing.

Other ships have been hit off Russia’s shores.

Both Romania and Bulgaria raised the issue at last month’s meeting of EU leaders and are pressing for more security support. However, while Romania has blamed Russia, Bulgaria has stopped short.

Meanwhile, the U.S. is steering talks on a Black Sea ceasefire and an agreement on safe passage, with Secretary of State Marco Rubio saying Washington is reviewing proposals from Turkey forwarded in late October and is “open” to ideas from India.

An agreement would not end the conflict, Rubio said, but it would “solve a unique aspect” of it by easing the spillover on food security for vulnerable nations.

EU foreign policy chief Kaja Kallas said on Oct. 21 that the bloc is working with Turkey, India and food-importing countries in Africa and other regions on a freedom-of-navigation deal. Ukraine has agreed to such an arrangement, she added, but Russia has rejected it.

Von der Leyen said the EU backs Ukraine’s call for a Black Sea ceasefire, referring to “the peace talks taking place in Abu Dhabi tomorrow with European presence.”

Commission chief spokesperson Paula Pinho gave no details on the proposals or the EU’s role. She noted a “common interest” in resolving disruptions, but declined to comment on the intentions of Turkey or the U.S.

Asked whether he foresaw a possible breakthrough this week, Ukraine’s Agriculture Minister Taras Vysotskyi was pessimistic. He said that Kyiv is “preparing to keep our farmers operating without access to the deep-water Black Sea ports for the long term.”

The Black Sea matters to both sides in the war.

The ports of Ukraine’s Greater Odesa region are main channels for its exports, including steel, iron ore and grain, and they bring in billions of dollars. Several ships hit in EU waters were carrying Ukrainian grain.

Most of Russia’s grain exports also leave through Black Sea ports such as Novorossiysk, a major oil export hub, along with Tuapse.

Other countries are deeply invested, too. Near Novorossiysk, the Caspian Pipeline Consortium terminal, partly owned by U.S. oil giants Chevron and Exxon, handles about 80% of Kazakhstan’s crude exports.

Turkey has suffered the most ship attacks, and tankers headed for Georgia have also come under fire.

Agnes Rønberg contributed reporting.

This article has been updated.

Beneath the chandeliers and oil paintings of his Presidential Palace, Finland’s president Alexander Stubb sat down next to his old friend Jonas Gahr Støre, the Norwegian prime minister, to call Vladimir Putin.

They hoped such a dramatic and direct intervention with Russia’s leader would demonstrate European resolve.

Instead, the conversation on a damp autumn morning in Helsinki triggered the biggest rift among Nordic allies since Putin’s full-scale invasion of Ukraine — and exposed Europe’s wider divisions over how to deal with Moscow at a pivotal moment in the push for peace.

As Russian and Ukrainian negotiators prepare for talks with Donald Trump’s envoys in Abu Dhabi this week, the fallout from the call is still reverberating across Europe. Governments are arguing over who should represent Europe in future negotiations and remain divided over a question at the heart of the debate: Does engaging Putin help deliver peace, or simply reward aggression?

Underlying European anxiety is another dilemma: Can America be trusted to broker a fair deal for them and most of all for Ukraine?

EU leaders will grapple with these questions at an informal summit in Dublin this week. Few involved expect them to agree. 

In an interview with POLITICO in Oslo, Støre explained why he and Stubb decided to call a leader waging hybrid warfare on Europe and killing Ukrainian civilians with daily drone and missile strikes.

“We work closely with our European partners in supporting Ukraine, but the only voice reaching Moscow comes from Washington,” Støre said. “And you know, we have good and open relations with the American negotiators, with the American administration, but this [war] happens in Europe. And living month by month, thinking that this war will end by Europe not talking to Moscow, I think, is an illusion.”

Other countries sharing a border — and a history —  with Putin’s Russia profoundly disagree. 

“Europe should not be in a mediator’s position,” Estonia’s Prime Minister Kristen Michal told POLITICO in another interview. “You should not take the role of trying to please the dictator.”

Based on interviews with politicians, diplomats and officials, many granted anonymity to discuss sensitive matters, this is the inside story of a phone call that shook Europe.

The Trump shock

Europe has struggled for influence over the stop-start Ukraine peace process ever since Trump returned to the White House in early 2025, promptly picked up the phone to Putin and ended U.S. financial assistance to Kyiv. 

Trump’s interventions shattered the transatlantic consensus built under his predecessor Joe Biden, offering Putin the prospect of an advantageous ceasefire and a return to the international fold. 

The U.S.-Iran war this year interrupted momentum but Trump returned to the topic of Ukraine again in October, criticizing President Volodymyr Zelenskyy for continuing to attack Russian energy infrastructure, while declaring that Putin’s side had been “fine”. 

Fearing the negotiations were drifting toward collapse, Stubb and Støre intervened. Støre hosted Zelenskyy and Trump envoy Steve Witkoff in Oslo in an attempt to repair relations. Stubb, who also attended, declared the meeting on Oct. 20 had put the peace process “back on track.”

But 24 hours later, Witkoff again stunned European leaders by meeting Putin in St. Petersburg and praising him as a “humanitarian.”

After consulting Zelenskyy, the two Nordic leaders concluded they could not leave Trump, Witkoff and Trump’s son-in-law Jared Kushner as the only Western figures speaking directly to Putin.

Old friends

Stubb and Støre have known each other for years and worked closely on Russian affairs when they both served as foreign ministers. They talk and text frequently — and like to pair up on key files despite coming from different political backgrounds. 

They had quietly explored the idea of a joint call to the Kremlin for months and concluded that reviving momentum would be critical ahead of renewed negotiations in Abu Dhabi.

Europeans, many officials privately acknowledge, no longer trusted Washington to defend either Europe’s interests or Ukraine’s.

“We have to ask the question in Europe if we feel that someone else should have the contact and the discussion on our behalf,” one EU government official said. “Is the feeling that the U.S. should own our objectives?”

“It’s important that Donald Trump is not the only leader from the West who talks to Putin,” another senior European official said. “We need pro-Ukraine leaders putting their messages to Putin too.”

So, almost five years after Russia’s diplomatic isolation began, Stubb and Støre decided to call the Kremlin. The Nordic team reached out to Putin’s officials and agreed parameters for the conversation. Each side would take turns to deliver their prepared messages, without interruption from the other.

Omens in oils

Some of the omens were inauspicious from the start. 

As the leaders sat next to each other at the long cabinet table in Stubb’s plush presidential salon on Oct. 27, two large, gilt-framed oil paintings loomed over them, depicting battle scenes from the Crimean War. One canvas shows an Anglo-French naval force retreating under fire on Finnish territory, a reminder of an era two centuries ago when Finland itself was part of the Russian Empire. 

According to some accounts, Putin shared his own keen interest in Russia’s past with the two Nordic leaders — delivering a lengthy lesson on Slavic history and the origins of the war in Ukraine. 

One senior official familiar with the matter said Stubb and Støre listened patiently during the 90-minute conversation. Other European officials briefed on the call denied that Putin had given the two leaders a history lecture at all, and suggested this claim was Russian spin aimed at humiliating the Europeans. 

Støre himself said: “I was present. He didn’t.” Putin has well-worn arguments about the origins of the war, he added. “But in all fairness, he can give his explanation, and we respond to that.”

For their part, the Nordic pair first gave Putin Zelenskyy’s messages — that territorial boundaries can only be discussed at leader level, face to face, and first there must be de-escalation measures. Stubb and his friend then turned to the matter of Baltic Sea security and the need to keep the waterway open for trade. 

One reason for holding the call was to try to judge Putin’s state of mind, according to officials. The Norwegian leader said Putin was “rational” and “professional” on the phone. “His arguments were perfectly clearly transmitted.”

Putin took the idea of talks in Abu Dhabi seriously and told the Nordic pair he would instruct his negotiators to prepare for the meeting to explore if progress is possible. “The fact that he picks up that phone, that we have, you know, other ways of reaching, I think that signals, at least that there’s a readiness to sit down.”

But afterwards, Støre was still not convinced that Putin was genuinely open to a deal. Despite their efforts, the Norwegian and Finnish team do not expect a major breakthrough in Abu Dhabi.

Baltic backlash

When Stubb’s office announced the surprise call had happened, the diplomatic blowback played out live in public.

By coincidence, the leaders of Denmark and Sweden, among others, were already gathered in Helsinki for a Nordic Council meeting. Confronted by TV crews, they made little effort to hide their irritation. 

“I’m very skeptical about this Norwegian and Finnish initiative,” Denmark’s Prime Minister Mette Frederiksen told broadcasters. “I think we should keep Europe united rather than going it alone.”

Swedish Prime Minister Ulf Kristersson said peace must come through “strength” rather than “appeasement”. Lithuania also criticized the move. 

In private, some diplomats were even harsher. “There are too many middle-aged men who want to end up in the history books having solved this war,” one EU diplomat said. “Putin is just gaining from opening up a more normalized dialogue with the rest of the world — and continuing to bomb and kill innocent people in Ukraine.” 

Their complaints were not simply over the decision to engage with Putin, but that Stubb and Støre had not properly coordinated with allies beforehand.

Officials familiar with the preparations for the call deny this, insisting that Frederiksen and others including the leadership in France, Germany, and the U.S. were told about the call before it happened. It may just have been that Frederiksen expected more advance warning, and a genuine say over the plan. She said her Finnish and Norwegian counterparts had failed to coordinate the call with “the rest of us.” 

Moscow endorsement

Støre is defiant. “She is right, because I did not ask — we did not ask for permission,” he told POLITICO. “We consult each other in the Nordic family, but it is not a mechanism which is that, you know, doing this requires a yes from all the Nordics or from 27 Europeans or beyond.”

Privately, some officials think Støre aggravated the wound in the immediate aftermath, when he pointed out that the EU had been divided on Russia since the war began. “It’s true — it’s just not his place to say it,” one official said. “Norway is not in the EU.” 

Stubb and Støre say they never sought to speak for anyone other than the countries they lead, which both border Russia. They talked to Zelenskyy at length before the call to agree what to say to Putin and then briefed him again afterwards. 

They had hoped their initiative would bolster Zelenskyy. Instead, the backlash became so intense that the Ukrainian leader stepped in to defend them. “They truly help us,” he said. 

The two Nordic leaders also won an endorsement from Moscow. “I believe it was the right thing to do,” Putin said. “After all, there are some people in Europe who do not want to inflict a strategic defeat on Russia … but seek to establish some kind of constructive dialogue.” 

Putin’s comments are unlikely to soothe lingering resentments between Nordic neighbors. As one official put it, there may be some lasting “family trauma” for those regional leaders who were not included in the Putin call plan. 

For all the northern angst, the episode also exposed a harder truth for Ukraine and its supporters. Despite Trump’s midterm election defeats, he is still dictating the pace of talks. Europe, meanwhile, has no one to match America’s booming voice when it matters in the room. 

Clea Caulcutt, Hans von der Burchard, Veronika Melkozerova and Laurens Cerulus contributed reporting.

U.S. President Donald Trump’s midterm election losses haven’t helped the U.K. economy — yet.

The Bank of England’s nine-member Monetary Policy Committee announced on Thursday it has overwhelmingly voted to increase interest rates to 4% from 3.75%, the first time since August 2023 to combat rising prices driven by the war in Iran.

Unlike the U.S. Federal Reserve and European Central Bank, the Bank of England has been reluctant to raise rates for fear of denting the British economy.

Until now, Governor Andrew Bailey and other MPC members have preferred to wait and see whether higher energy prices spilled over more broadly.

But the Bank was forced to increase rates after U.K. inflation came in at 3.5% in September, while the economy posted better-than-expected growth figures — raising the risk prices could take off.

The MPC on Wednesday voted 8-to-1 to raise rates, arguing the energy shock since the war began has built “sufficient” inflation pressures to justify a hike.

The dissenting vote from Catherine Mann was for a larger increase of 0.5 percentage points.

But Bailey made no secret of the fact that the future health of the U.K.’s economy depends on what the U.S. does in Iran.

“Today’s increase shouldn’t be seen as the first in an inevitable long sequence of hikes,” Bailey said.

“But, unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase.”

The Bank projected inflation would pick up to nearly 5% by the second quarter of 2027, higher than its previous forecast, with greater spillover into wages and other prices.

Under an adverse scenario, in which prices stay higher for longer and the conflict in the Middle East continues to flare, inflation would hit 6.2% in the third quarter of 2027.

Thursday’s decision, which comes a week after Chancellor John Healey delivered his first budget under the specter of Brits paying the highest energy prices in three years, will further squeeze struggling U.K. households and businesses already hit with higher energy bills and mortgage rates.

The tougher financing backdrop could hurt the Burnham government’s promises to tackle the cost of living. Yet rampant inflation would also undercut that pledge.

Still, the Bank’s top brass also pushed back on market expectations that rates could by hiked to 4.75% or 5% in 2027 — which could help bring down decades-high government borrowing costs.

The Trump factor

The decision comes as the rout of Trump’s Republican Party at the U.S. midterm elections on Tuesday raised the prospect of a peace deal in the Middle East.

A thaw in the conflict could bring down fuel prices by easing pressure on oil supplies and improve the cost-of-living picture for U.K. households.

There were reports Trump could respond to his party’s losses by embarking on a bombing campaign in the Middle East, but the U.S. president appeared to accept on Wednesday that higher petrol prices affected his popularity and struck a more conciliatory tone on the prospect of peace negotiations. 

U.S. Vice-President JD Vance blamed the Iran war for the electoral losses. And U.K. Prime Minister Andy Burnham said Wednesday that the elections create an opportunity to focus on the cost of living.

Oil prices fell sharply on Wednesday, amid expectations Democrats could also limit Trump’s funding for the conflict. The possibility of a ceasefire could yet be subject to Trump’s whims.

Regardless, U.K. consumers will feel the pinch through a rise in the energy price cap in January. 

Even if falling oil prices persist over the next few weeks, the price cap is likely to rise substantially because of a lag in the way it is calculated. 

The Bank forecast the cap will hit £2,150 in the first quarter of 2027. Food price increases, which have so far been muted, could hit 4.75% by mid-2027 as companies pass through higher costs.

Healey’s budget will knock 0.25 percentage points off inflation by the second quarter of next year, the Bank said, while tighter fiscal policy to bring down the deficit would likely detract from growth in the medium term.

Often, the coolest art comes from simple, often unnoticed materials. When reimagined into a new context, everyday household materials can be the base for wonderful works of art. I've always loved watching people transform everyday materials into new ideas.

This aluminum foil piece, Cats and Mice by artist Dean Millien, fills me with joy. — Read the rest

The post An artist sculpts magical cats and mice out of aluminum foil appeared first on Boing Boing.

In late August, President Donald Trump announced what he called the “biggest oil deal in world history.” Since then, the full text of the accord — which grants the U.S. sweeping access to Venezuela’s oil reserves — has been one of the most sought-after secrets in Washington, D.C. 

ProPublica has reviewed a copy of the 18-page strategic partnership agreement signed for the United States by Secretary of State Marco Rubio and Defense Secretary Pete Hegseth. The document reveals carefully constructed terms that favor U.S. interests at every turn and cements the power of a small group of people handpicked by the Trump administration to govern and profit from the deal. The role of the Venezuelan government and the potential benefits to its people are largely absent from the text.

One of the most criticized aspects of Trump’s announcement has been his choice of a partner: Alejandro Betancourt, a globe-trotting Venezuelan oligarch who has faced money-laundering investigations in three countries. 

The Trump administration is taking a 35% stake in Betancourt’s firm, North American Blue Energy Partners, by acquiring shares in a Barbados-registered parent company. The deal document provides little information about the owners and investors behind the parent company, who could receive enormous wealth from the arrangement. 

The agreement also safeguards Betancourt’s position as chief executive of NABEP and says the U.S. government will work with the parent company to appoint a powerful seven-member board to govern the venture for an initial 15-year term. Those aspects of the deal, according to people with knowledge of how it came together, were designed to prevent future U.S. and Venezuelan leaders from dismantling the enterprise. 

Orlando Alvarado, a name not disclosed by the Trump administration as a party to the accord, signed the agreement on behalf of the parent company, alongside Betancourt, Hegseth and Rubio. Alvarado has held senior roles in multiple Betancourt businesses, including as chief financial officer of an energy firm that became embroiled in scandals a decade ago. According to the Miami Herald, federal prosecutors identified Alvarado as an unindicted co-conspirator in a scheme to embezzle money from Venezuela’s national oil company.

NABEP spokesperson Terry Wade said that “neither Mr. Betancourt nor Mr. Alvarado has ever been charged with any crime in any country, and any claims against them are baseless.” 

Key aspects of the plan differ from the Trump administration’s public pronouncements. Trump has said the deal will secure America’s energy dominance for the next century. But the text indicates that U.S. purchasing rights expire in half that time and that the underlying operating rights appear to run afoul of Venezuelan laws limiting oil concessions to 25 years.

The agreement does ensure the United States a deep discount from fair-market value on 20% of NABEP’s oil, as Trump has said. It does not, however, explicitly guarantee that Betancourt’s company is obligated to pay the estimated $200 billion in royalties and tax payments to Venezuela that the White House has said would benefit the country. 

There are also significant caveats related to Trump’s central selling point to Americans — that the deal will bring a gusher of low-cost oil imports. 

The agreement gives the U.S. the right to purchase 20% of NABEP’s oil at a discounted rate of $30 a barrel, or less than a third of what oil has sold for in recent months, according to one of three supporting documents reviewed by ProPublica. 

But this fee does not account for the cost of getting Venezuela’s oil out of the country. Much of Venezuela’s raw crude is so thick that it won’t flow through pipelines unless it is first blended with 20% or more of oil thinner products. Under the deal, the potentially significant cost of importing millions of barrels of those blending materials is not included in the price.

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The White House, the State Department, the Pentagon and the energy company NABEP all defended the agreement, saying in statements that their new public-private venture will provide meaningful and lasting economic benefits to both countries that cannot be captured in a legal document. 

“This historic deal marks a major step toward stabilizing Venezuela’s economy after years of hyperinflation and almost no new investment, while more than doubling the United States’ oil reserves,” said White House spokesperson Taylor Rogers.

Wade emphasized that NABEP was chosen because of its track record of expanding oil production in Venezuela in recent years and that the agreement was between the company and the U.S. government, not Venezuela.

“Thanks in large part to the agreement,” Wade said, “there is a surge in confidence about the future of Venezuela’s oil industry and, as a direct result, substantial new investments are flowing into the country.”

He added that much of NABEP’s oil comes from fields that require little or no blending materials and that blending costs would not meaningfully impact the price of production. “Our barrel economics are strong.”

The newly revealed details of the agreement are nonetheless likely to raise more questions about whether the unorthodox marriage of the United States and a foreign energy baron can bring lasting benefits to either country — and which private parties might benefit along the way. Trump’s oil deal is likely to face scrutiny in both the United States and Venezuela, especially if Democrats win one or both chambers in the midterm elections, according to former U.S. diplomats and congressional staff.

“Question number one in a new U.S. Congress will be: Why Betancourt?” said former Ambassador James Story, who served as the top U.S. diplomat in Caracas from 2018 to 2023, in an interview. “Why did he get this deal? And was he involved in criminality? It seems reasonable to have a congressional hearing about those questions.”

“Question number one in a new U.S. Congress will be: Why Betancourt?”

James Story, former U.S. ambassador to Venezuela

In public comments, Delcy Rodríguez, who won the backing of the Trump administration to serve as Venezuela’s interim president, praised the accord as “historic.” She has asserted that Venezuela will retain sovereignty over its natural resources and defended the choice of Betancourt. 

People with knowledge of the Trump administration’s behind-the-scenes decision-making and negotiations with Betancourt spoke to ProPublica on condition of anonymity because they were either not authorized to do so or were fearful of retribution. 

One reason that the precise terms of the deal have remained hidden until now is that the signed agreement is marked as a “sensitive” government document. That classification is commonly used to shield a variety of federal records from public release, including those containing personnel information, details about ongoing law enforcement operations and matters protected by attorney-client privilege. The document also contains a confidentiality clause barring Betancourt’s company from disclosing the “existence and terms” of the U.S. government agreement.

One person familiar with the deliberations said that people close to the Trump administration  seemed keen to partner with Betancourt’s company because of the privacy and flexibility it offered. That appeared to give NABEP an advantage over publicly traded oil companies, which would be obligated to shareholder reporting requirements. 

“For example,” the person said, “Chevron couldn’t give 35% of their shares to the Pentagon.”

The Deal

The oil deal is sensitive partly because of likely resistance in Venezuela, where critics have already described it as a U.S. takeover of the country’s precious natural resources.

A ProPublica analysis shows that its terms favor American interests at nearly every turn and try to enshrine the Trump administration’s imprint indefinitely. 

The document states that a majority of the seven-member board must be U.S. citizens at all times, and the U.S. government can appoint one “non-voting observer” to join the group. Betancourt, who will serve as the chief executive, is the only board member named by the agreement. The initial board will establish the process for choosing new members. 

“Throughout the evolution of the deal, it was clear that the governing structure was intended to ensure maximum control by the people making the deal and to insulate them from future administrations seeking to reverse the agreement or call it into question,” a person familiar with the negotiations said.

There is no requirement for any Venezuelan government participation in the board.

The agreement also offers long-lasting protections for Betancourt and unnamed investors. It requires a supermajority vote of five to oust Betancourt as CEO, change the board composition or execute any transactions with a shareholder that isn’t the U.S. government, an indirect equity holder, director, affiliate or “immediate family members.”

The board will determine compensation for Betancourt in his role as chief executive, the document says. As structured, the deal does not appear to require any public disclosures about pay or distribution of shares to executives.

The agreement does not say which shareholders, affiliates or family members have been approved to transact with Betancourt’s company. Under Barbados corporate law, there is almost nothing that can force those interests to be revealed publicly. 

The agreement does, however, require the company to maintain “anti-money laundering controls,” submit to external audits and inspections of its records by the U.S. government, and provide the U.S. government with an annual budget and quarterly unaudited financial statements. It is unclear if these reports will ever be made public. 

It could be some time before the company produces enough oil to fulfill a significant share of U.S. demand. Betancourt’s company currently produces about 200,000 barrels per day — or about as much over the course of a year as the United States uses in three days. 

NABEP aims to increase its production to 500,000 barrels per day by the end of 2028, according to recent reports.

In addition to securing a discount on 20% of NABEP’s oil, Washington also has “first priority” to purchase all of the company’s remaining oil production for the next 50 years, including an irrevocable right to buy its entire oil supply in the event the U.S. declares a national emergency. 

The U.S. also receives a “most favored nation” status that requires Betancourt’s firm to disclose any other business agreements it signs, and, if they are favorable, to grant Washington matching terms.

One person who reviewed parts of the contract was surprised at the tangible benefits for the U.S. compared with the lack of binding commitments to Venezuela: “I gave you 20% of my production at ‘cost plus,’ fine. I gave you all of my production if there’s a national emergency, OK. … So what do I get in exchange?”

A U.S. official said Rodriguez had granted NABEP 100-year oil concessions to operate there, although this figure is not referenced in the accord and appears to contradict Venezuelan law. 

In the event of a dispute, Venezuela can’t challenge the deal in its own courts. The agreement dictates that any conflict between the company and the United States must be settled under U.S. law, not Venezuela’s. The two sides even spelled out that any civil case or arbitration must be argued before the United States District Court for the Northern District of Texas, where Trump’s Justice Department has turned, time and again, for favorable rulings. 

Where U.S. law does not apply, Texas state law governs, the agreement states. 

A Pentagon office has been tasked with someday executing the financial transaction to capitalize on the U.S. government’s 35% share in the venture. The document shows that the U.S. will pay nothing upfront but plans to acquire its stake in Betancourt’s company by paying $0.01 per warrant share. Those terms are set to expire on the 75th anniversary of the closing date.

In a White House statement last month, Trump touted those shares as potentially worth “hundreds of billions,” plus dividends. But Democrats on the Senate Armed Services Committee said they believe the Pentagon office does not have the legal authority to execute an agreement with a foreign entity operating in a country under U.S. sanctions.

Pentagon press secretary Kingsley Wilson said that the Defense Department conducts “extensive due diligence” before extending capital assistance. Wilson declined to comment on any of the legal considerations or further technical aspects of the deal “to protect the integrity of the process.”

Several other detailed aspects of how the company will operate are currently under negotiation among the Trump administration, Betancourt and the parent company, the partnership documents show. The agreement repeatedly cites a set of “Implementation Documents” that will finalize the U.S. ownership stake and the rights of unnamed investors. 

The full force of the deal will not take effect until both parties have complied with its closing conditions, which the agreement indicates could happen within months.

Last month, Senate Democrats blasted what was known of the oil accord and demanded details in a letter to Rubio, Hegseth and Secretary of Energy Chris Wright.

“It is unclear why the American public should support this attempt to entangle the United States with a relatively unknown foreign oil company that lacks the capacity or credibility to develop oil fields of the magnitude described and whose leadership has faced international criminal investigations,” four ranking senators said in the letter. 

They asserted that most of the “oil fields are nowhere near ready for production” and that it could “take up to a decade before global oil markets are meaningfully impacted and the American people see any tangible benefit.”

A Willing Partner

Almost immediately after U.S. special operations forces seized President Nicolás Maduro in January and airlifted him out of Venezuela, Trump left little doubt that his larger goal was to restore American access to Venezuela’s oil reserves two decades after most U.S. firms had been ejected from the country. 

By early spring, an obscure cast of energy officials, lawyers and lobbyists had started to craft plans to deliver on Trump’s America First energy agenda. One person familiar with the deliberations said that U.S. officials had considered backing an idea for publicly held American oil companies like Chevron, Exxon and Conoco to carve up and rehabilitate Venezuela’s aging oil sector. Another potential route went through Betancourt’s company, which is the second largest private oil firm operating in Venezuela. Working with the Venezuelan state company, Petróleos de Venezuela, SA, was never really an option due to its underlying debt and history of corruption, the person said.

The option of turning to large multinational oil companies quickly stalled. In some cases, oil executives balked at jumping back into the complexity of the Venezuelan market; in others, firms struggled to get more than “lip service” meetings in Washington and Caracas, according to media reports and people familiar with the deal. 

“NABEP was given priority,” one person said. “Exxon, Conoco and the others were treated as second class.” 

Betancourt’s star was rising in the Trump administration. He had served as an interlocutor for Washington with the Maduro government and had ties to some leaders of the Venezuelan opposition, according to current and former U.S. officials. He had also provided information that helped the U.S. forces seize Venezuelan oil tankers and that aided strategy and planning before the capture of Maduro, Reuters reported. 

In addition, Betancourt had developed a good relationship with Rodríguez, whom Trump had backed as the country’s interim president. And Betancourt had done so despite the fact that her influential brother, National Assembly President Jorge Rodríguez, had accused him of corruption in a televised speech in 2020, according to former U.S. officials and press reports.

U.S. officials also saw practical reasons to partner with Betancourt, several people said. He and his then-business partner in the U.S., Harry Sargeant, a Trump supporter, appeared to be a rare success story in a battered industry, operating some of the only active oil fields in the country.

“The main thing I found promising is that the fields are producing in Venezuela,” said a former State Department official who analyzed the company’s activities. “I think it’s particularly important that you buy into fields that are producing. … If your policy goal is to raise production quickly, this makes sense.”  

But partnering with Betancourt posed major challenges. 

For starters, the 46-year-old billionaire was confined to house arrest on his 300-acre Oxfordshire estate in England, fighting off a Swiss extradition request tied to an international money-laundering probe. Betancourt could fly to his $46 million London residence by private helicopter — but his Venezuelan and Italian passports were locked down, and British authorities had barred him from driving on public roads, according to media reports about the special bail arrangement.

Betancourt’s legal problems stemmed from his role in troubled Venezuelan energy projects during the corrupt rule of former President Hugo Chávez. Several of Betancourt’s known or alleged associates were charged or convicted in a major U.S. money-laundering investigation known as Operation Money Flight. Betancourt surfaced as a suspect in the U.S. case and is still under investigation for suspected money laundering by authorities in Spain, according to former U.S. and European officials and press reports. 

The most popular leader of the Venezuelan opposition in exile, María Corina Machado, recently described Betancourt as having been involved in “obscene corruption” that caused great suffering for the Venezuelan people, according to a recent New York Times interview. 

Betancourt has not been charged in any country. His lawyer has maintained his client’s innocence, saying Betancourt has been unfairly maligned because people associate him with a group of wealthy young Venezuelans, some of whom have been accused of wrongdoing, according to press reports.

Many Venezuelans see Betancourt as a “totemic, emblematic, corrupt figure,” said Brian Naranjo, a former senior U.S. diplomat in Venezuela, in an interview.

“He is not really an oil man,” Naranjo said. “The talent he brings is that he’s a new person in a long line of Venezuelan businesspeople who deal in influence. Their big lever is connections and influence. It is know-who, not know-how.”

In a recent interview with Spanish language media, Rubio defended Betancourt, praising his oil company’s work in Venezuela and his support for factions of the Venezuelan opposition in exile.

Rubio downplayed the legal scrutiny Betancourt has faced, saying a review conducted with U.S. law enforcement agencies indicated “there were no investigations of him in our system.”

“The talent he brings is that he’s a new person in a long line of Venezuelan businesspeople who deal in influence. … It is know-who, not know-how.”

Brian Naranjo, former U.S. diplomat

It remains unclear exactly how Betancourt shed the travel restrictions imposed by European authorities. But The Washington Post reported that senior Trump administration officials, including Deputy Secretary of State Christopher Landau, former Attorney General Pam Bondi and then-Deputy Attorney General Todd Blanche, petitioned their foreign counterparts to allow Betancourt to travel freely and to close their investigations into him and his business ventures. 

The Trump administration’s next hurdle to working with Betancourt was figuring out how to legally invest. The government’s $200 billion investment agency, the International Development Finance Corporation, was created to do just that but is currently barred by U.S. law from operating in Venezuela.

At different points through the summer, aides to Office of Management and Budget Director Russell Vought stepped in, pressing Defense and State department officials to consider alternate financing paths, according to one person familiar with the deal’s progression.

By July, the Pentagon’s Office of Strategic Capital, headed by David Lorch, emerged as a potential solution.

Lorch, who had moved to the Pentagon from Deputy Defense Secretary Steve Feinberg’s private equity firm, Cerberus Capital, quickly embraced the idea, according to people familiar with the deal. Lorch and other Pentagon and State Department officials flew to Caracas in the final days of that month and agreed in principle to a deal. The details would be hammered out back in Washington, the people said.

A Pentagon spokesperson said Lorch declined to comment.

On Aug. 5, Betancourt strode into a conference room behind the art deco facade of the old Greyhound Bus Terminal in downtown Washington that houses an auxiliary Pentagon office. The assembled Defense Department officials gave the Venezuelan billionaire the red carpet treatment, lining up to shake his hand, according to people familiar with the meeting. But some in the room were stunned to discover that the U.S. government was preparing to do business with Betancourt, the people familiar with the meeting said. 

Betancourt was accompanied by Jacob Hirshman, the chief executive and co-founder of Erebor Bank, the first new bank chartered after Trump returned to office, according to people familiar with the meeting. The bank, backed by Trump supporters and investors Peter Thiel and Palmer Luckey, has vowed to reconnect Venezuela to the world economy.

Hirshman did not respond to a request for comment.

Lorch told the group, which included dozens of former Wall Street associates he’d hired into the office, that the alliance with Betancourt was a major “opportunity” to fulfill one of the Trump administration’s top goals, securing benefits to the United States and Venezuela for decades to come. 

The meeting touched off a month of around-the-clock calls and video conferences.

People familiar with the deal’s progression said Lorch soon became involved in structuring key aspects of the deal beyond its financing, including how the board would sit for 15 years and choose its successors. One said he put an explicit premium on setting up the venture in a way that it could not be undone by Trump’s successor.

The months of work on the deal burst into public view on Aug. 28 with a Trump announcement on Truth Social.

“The United States of America has just entered into an Agreement with the Country of Venezuela on, THE BIGGEST OIL DEAL IN WORLD HISTORY!” Trump posted on a Friday night.

Two days later, Hegseth, Rubio, Betancourt and Alvarado signed the deal.

The post The secret terms of Trump’s Venezuelan oil deal appeared first on Salon.com.