Will a price cap on Russian oil sales be a winning move in the Ukraine war? Since the invasion began, Russia has continued exporting crude and refined oil products at barely less than pre-war volumes and at rising prices that have replenished Putin’s coffers. From this week, however, the EU and G7 have imposed a ban on seaborne Russian crude imports and a $60-per-barrel price cap to be enforced by banning western shipping and insurance firms from handling Russian shipments sold above the price cap.

But as I write, $60 is actually the market price of Urals crude – which has lately been trading at 25 per cent below Brent crude – so the cap won’t make much immediate difference to Moscow. Hence President Zelensky of Ukraine calls it a ‘weak’ measure, while stories abound of Russia buying up a ‘shadow fleet’ of up to 100 elderly oil tankers that will continue carrying its oil to India, China, Turkey and elsewhere without the benefit of Lloyd’s of London insurance.

The truth appears to be that the new scheme is deliberately weak. It’s a show of EU-G7 solidarity that might put a dent in Russian revenues and might make a marginal difference to western inflation by setting an oil-price benchmark, but it has been designed not to reduce global oil flows overall, which would drive barrel prices upwards despite reduced demand as recession sets in.

The Kremlin’s response so far is to say it won’t sell oil to any countries that abide by the price cap. But Putin could go much further: for the deranged and isolated Russian autocrat, restriction of energy supplies, by ship or pipeline, at whatever cost to his own treasury and people, is still the best non-nuclear weapon he has against his perceived western enemies. An oil price cap may turn out to be no more effective than poking a mad dog with a stick.

Diamond rush

When Credit Suisse, the Swiss bank whose troubles I’ve been chronicling all year, announced as part of a last-ditch ‘de-risking’ plan that it intends to spin out its investment banking arm under the revived name of ‘CS First Boston’, opinion divided as to whether that was a brilliant wheeze or a sad one.

First Boston, founded in 1932, was a top-notch Wall Street house. Credit Suisse First Boston, created in 1978, was a market-leading joint venture in London and New York, populated in its heyday by legendary bankers such as Michael von Clemm and Hans-Joerg Rudloff. But the name was erased when the firm was subsumed in 2005 into Credit Suisse itself. The Swiss parent went on to do some truly terrible business on several continents, including losing $5.5 billion on a single US client called Archegos. Reattaching ‘First Boston’ to such a diminished brand may or may not be hubristic but the new entity will surely struggle to create a resemblance of its illustrious forebear.

But wait: who’s that emerging from undergrowth like Sylvester Stallone in search of a comeback? The new CS First Boston aims to take in external capital that will dilute Credit Suisse’s ownership. And the first investor to show interest is none other than Bob Diamond, the controversial former Barclays Capital chief, also much written about in this column, who was forced to resign in 2012 after the Libor scandal – and who in his younger days was a top trader at CSFB.

Diamond has spent the past decade building a banking venture in Africa. But at 71, he’s evidently still hunting for bigger game. For the Credit Suisse board, intent on rebuilding a safe but boring Swiss business while quietly burying past misadventures, our old friend Bob must be one of the very last people they’d hope to find waiting in their Zurich lobby.

My Bulb bailout

Bulb – the entrepreneur-led supplier of energy from renewable sources that went bust in September last year – somehow continues to provide gas and electricity to my London flat. It does so under a ‘special administration’ set-up, akin to nationalisation, that we’re told has cost £6.5 billion so far, making it the biggest state bailout since Lloyds and RBS in 2008. The High Court has just approved a deal in which Octopus Energy, which has 3.4 million customers, will pay a small upfront price to acquire Bulb’s 1.5 million accounts, creating the UK’s third-largest supplier and relieving the government’s Bulb burden.

End of story? Not if a judicial review process launched by rivals British Gas, E.ON and Scottish Power – claiming ‘defects’ in the search for a buyer and lack of transparency in the terms offered to Octopus – delays the sale or forces it to be rerun. That would not only keep the government’s costs running but would also be personally embarrassing, because what with £400 of ‘energy support’ subsidies plus the £500 winter fuel payment I’m entitled to as a state pensioner, combined with mild weather and vigilant boiler control, keeping warm this autumn has been surprisingly cheap. But I’ve already cost you, the taxpayer, £4,333 – a 1.5 millionth part of the bailout bill. Hardly my fault but let’s hope that’s the limit.

Warren wisdom

This being our last issue of 2022 before the Christmas special, I’ll close with an uplifting ethical message – borrowed from Warren Buffett, the ‘Sage of Omaha’ whom I’ve had occasion to mention more than once lately for his acumen as a ‘value’ investor. A reader kindly sent me a homily from Buffett’s 1991 excursion as chairman of Salomon Brothers after the Wall Street investment bank had shamed itself in a bond-trading scandal. In his folksy style, he urged every Salomon executive to be guided by a simple test of any business decision: ‘Ask himself whether he would be willing to see it immediately described by an informed and critical reporter on the front page of his local paper, there to be read by his spouse, children and friends.’ Put a different way, if you wouldn’t like to see it in next year’s ‘Any Other Business’, don’t do it.

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