The EU’s price cap on Russian oil is playing out a little chaotically, particularly on the Bosphorus, where it’s led to a jam of oil tankers. Millions of barrels of crude are stuck at the key shipping strait after the bloc’s oil sanctions on Russia came into effect Monday and Turkey began asking for proof that the ships are insured. While the government in Ankara has come under pressure from the US and Britain — not to mention the insurance industry — to change its rules, it’s not caving in. Russia is brushing off concerns that the oil-price cap imposed by G-7 nations will throw its production into turmoil. And the mechanism may not make much of a dent in Moscow’s revenues. Still, four days into the cap, it appears most — but not all — oil is trading well below the threshold being imposed on Moscow.

— Lyubov Pronina

What's Happening

Gas Opposition | Six EU nations including Germany and the Netherlands oppose extending a proposed price cap on natural gas to over-the-counter trade and short-term markets, warning that any intervention must ensure prices stay competitive with world markets. The group also wants the so-called market correction mechanism to include an automatic suspension. 

Squeezing Iran | The EU is preparing more sanctions against Iran over both military aid Tehran has provided to Russia and its violent crackdown on protesters, we’re told. The travel bans and asset freezes would be imposed on 21 individuals and entities over the repression of protests, with 10 listings linked to deliveries of drones to Russia used in its war in Ukraine.

Sparing Europe | The impact of the EU’s sanctions on its own economy has so far been largely contained to a few specific sectors, according to an assessment prepared by the commission that we learned about. The measures have caused supply issues in sectors like wood and precious metals, but wider disruptions have mostly been from market trends or Moscow’s retaliation.

Rate Hikes | ECB policymakers are seen raising rates by half a point next week and again in early February, taking the deposit rate to 2.5%, economists in our survey predict. They’re expected to keep it at that level for some 18 months before a deteriorating economy and easing price pressures warrant a turnaround.

Bond Spree | European governments have been busy drafting aid programs to protect their citizens from the surge in energy costs, and analysts at Barclays Bank estimate it will force them to sell more new debt in the bond market next year — upwards of €500 billion on a net basis — than anytime this century. That figure takes into account other sources of funding outside the bond markets.

In Case You Missed It

Schengen Split | Croatia won the EU’s endorsement to join the region’s visa-free travel area while Bulgaria and Romania’s bid was delayed. The two countries have long met the technical criteria to join the Schengen zone, but some EU members have expressed reluctance over concerns about the countries’ ability to curb graft and uphold the rule of law.

Rebel Farmers | Intensive farming — and decades of official inaction — have devastated biodiversity in the Netherlands, forcing a painful reckoning as the government clamors to save its natural ecosystems from collapse. Read our Big Take on how farmers are resisting efforts to curb the environmental impact of agriculture that could put them out of business.

US Bound | Airbus CEO Guillaume Faury warned that European aerospace suppliers are starting to move to the US to escape surging energy costs and urged governments to provide tax breaks to halt the flow. Some German companies, for example in the chemicals sector, have already decided to relocate, while in France there’s more of a “wait and see” attitude that could result in departures early next year.

Taxing Crypto | The EU proposed new rules yesterday to combat tax fraud and evasion in the crypto sector by requiring all digital-asset service providers to report transactions involving customers residing in the bloc. The initiative aims to ensure that EU residents pay taxes on gains from trading or investing in crypto assets and would establish a common minimum level of penalties for cases of serious non-compliance.

Weapons Finance | Brussels is set to boost the size of a fund to finance weapons for Ukraine by at least €2 billion as early as next week and the facility could be topped up with even more money later, we’re told. The European Peace Facility, which currently has a ceiling of about €6 billion, reimburses governments for military deliveries to Ukraine, along with support for other countries.

Chart of the Day

The G-7’s price ceiling on Russian oil exports isn’t low enough to take a big bite out of the Kremlin’s revenues next year. At $60 per barrel, “the price cap looks very generous,” said Renaissance Capital economist Sofya Donets. Russian officials say they plan to continue to divert flows to countries like China and India that aren’t formally signing up to the price limit.

Today's Agenda

• 2:30 p.m. German Chancellor Olaf Scholz takes part in a technology conference in Berlin with Estonian Prime Minister Kaja Kallas
• Commission President Ursula von der Leyen and European Council President Charles Michel participate in the summit of Southern EU countries in Alicante, Spain
• Justice ministers meet in Brussels
• Health Commissioner Stella Kyriakides participates the Employment, Social Policy, Health and Consumer Affairs Council