☕ The drug boat strikes, explained

Good morning!

A story we’re watching today: the fallout from Tesla’s announcement that its profits fell 37% in a year, despite a record year of revenue for the EV company.

Tesla says the increased cost of robotics and AI has led to slimmer margins, as well as the ongoing impact of tariffs - but it will be interesting to see how the broader U.S. market interprets that news.

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Some headlines from this morning:

• Zohran Mamdani, Andrew Cuomo, and Curtis Sliwa held their final debate last night ahead of New York City's mayoral election on November 4. Mamdani holds a substantial polling lead despite attacks from Cuomo and Sliwa throughout the campaign. The debate focused on how each candidate would work with President Trump, Mamdani's relationship with the Jewish community, city affordability, and policing. Early voting begins Saturday and runs through November 2.

• Hundreds of prominent figures, including Nobel Prize winners and Prince Harry, signed a statement calling for a ban on developing Artificial Superintelligence (ASI). ASI would theoretically operate beyond human comprehension, surpassing Artificial General Intelligence (AGI), which functions at human-level capability. The signatories, including former White House advisors and AI researchers, said guarantees must be provided that superintelligence development won't threaten humanity. The statement argues that no safe development framework currently exists for ASI technology.

• The International Court of Justice ordered Israel to cooperate with humanitarian agencies and allow aid to flow freely into Gaza on Wednesday. The UN's highest court found Israel has an obligation under international humanitarian law to ensure Gazans receive essential supplies, including food, water, shelter, fuel, and medical services. Aid delivery is currently limited to two crossings along Israel's border with Gaza. Israel rejected the ICJ's legal opinion, which was issued following a request from the UN General Assembly.

• French police have found DNA evidence on helmets and gloves left behind by thieves who stole $102 million in jewels from Paris's Louvre Museum on Sunday. Investigators are analyzing the DNA samples, which represent the first major break in the case, according to French authorities. Louvre director Laurence des Cars told France's Senate Culture Committee on Wednesday that she submitted her resignation following the daylight robbery from the museum's Apollo Gallery, but Culture Minister rejected it. Des Cars called the heist "an immense wound" and admitted "we have been defeated" amid criticism over security failures at one of the world's most famous museums.

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President Trump imposed sweeping sanctions on Russia's two largest oil producers on Wednesday, marking the most aggressive U.S. economic action against Moscow since the war in Ukraine began. The move came after diplomatic efforts to end the conflict stalled, and European allies increased pressure on the White House.

The sanctions target Rosneft and Lukoil, which together export 3.1 million barrels of oil daily - representing nearly half of Russia's total oil production. "Every time I speak to Vladimir, I have good conversations and then they don't go anywhere," Trump told reporters after announcing the measures.

Here's what you need to know.

The sanctions

The Treasury Department sanctioned Rosneft and Lukoil, barring U.S. companies from purchasing Russian oil from either producer. Trump also urged allied nations to stop buying from these sources.

Treasury Secretary Scott Bessent called the companies "the engines of the Kremlin's war machine," adding that sanctions were necessary because of "Putin's refusal to end this senseless war."

Britain imposed similar sanctions on both companies last week.

Why it matters

Oil and gas remain Russia's largest exports and primary funding source for its military operations in Ukraine. The sanctions aim to squeeze Russia's economy and force President Vladimir Putin to negotiate an end to the war.

These are the strongest U.S. sanctions since President Biden's initial package in 2022, shortly after Russia's invasion.

Diplomatic pressure

The sanctions followed a series of failed diplomatic efforts. A planned meeting in Hungary between U.S. and Russian officials was postponed on Monday after talks between the countries' foreign secretaries reached a stalemate over ceasefire conditions.

Trump met with Ukrainian President Volodymyr Zelenskyy this week, and NATO Secretary General Mark Rutte arrived at the White House today.

When asked why he imposed sanctions now, Trump said he "just felt it was time. We waited a long time."

What’s next?

Trump said he hopes to lift the sanctions quickly once Russia agrees to end the war.

Russia has not yet responded to the announcement. Meanwhile, pressure continues to build on Trump to impose secondary sanctions on countries purchasing Russian oil and to provide Ukraine with long-range Tomahawk missiles capable of striking targets inside Russian territory.

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The U.S. has conducted nine strikes in international waters since September, killing at least 37 people.

The majority of the strikes have been near Venezuela, with authorities saying they are targeting drug traffickers.

In a post to X on Thursday, Secretary of War Pete Hegseth said the strikes would continue until the “threat” of drug trafficking is “extinguished.”

Venezuelan authorities have condemned the administration’s actions in the region, calling them “hostile”.

Some context

Since his re-election, President Trump has accused Venezuelan President Nicolas Maduro of involvement with the gang Tren de Aragua, which he has declared a terrorist organisation.

Last week, Trump said he had authorised the CIA to conduct covert operations in Venezuela.

In a statement in response, Venezuelan authorities said this suggested the U.S. was seeking to overthrow the current government.

Caribbean strikes

Since the beginning of September, the U.S. has struck multiple boats near Venezuela’s coast, killing at least 32 people in the Caribbean Sea.

The U.S. alleged these boats were being used to traffic drugs.

It has also sent thousands of troops to the region.

Pacific strikes

Earlier this week, the U.S. carried out strikes in the Pacific Ocean for the first time during this crackdown, killing five people.

Hegseth alleged the vessels the U.S. hit were “involved in illicit narcotics smuggling”.

He labelled drug trafficking organisations as “the ‘Al Qaeda’ of our hemisphere” and said they “will not escape justice.”

Venezuela’s response

Following strikes last month, Maduro told a press conference: “The communications with the Government of the U.S. have been thrown away, they have been thrown away by them with their threats of bombs, death and blackmail”.

The Venezuelan Government has since said Trump’s use of the CIA and military actions in the Caribbean Sea “constitute[s] a policy of aggression, threats, and harassment against Venezuela.”

Political response

Democrats have also criticised the strikes, with Representative Adam Smith saying the Trump administration has “failed to demonstrate the legality of these strikes [or] provide transparency on the process used”.

Smith also called on Trump to release “a list of cartels that have been designated as terrorist organisations.”

Trump needs Congress’ approval to go to war, but not for individual strikes.

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