Turkey's Import Surge Yields $2 Billion Savings Despite Sanctions on Russian Oil
- 19-Dec-2023 2:39 PM
- Journalist: Timothy Greene
Turkey and Turkish enterprises have reaped approximately $2 billion in energy cost savings for the year 2023 by increasing their imports of discounted Russian oil and refined products. Despite facing Western sanctions, Ankara has communicated its intention to further elevate its procurement from Russia.
In the aftermath of Russia's invasion of Ukraine, European nations significantly curtailed their imports of Russian oil and gas, resulting in Turkey emerging as the largest importer of Russian energy in the Western hemisphere. While China and India imported larger quantities from Russia, Turkey's geographical proximity to Russian ports provides additional savings due to reduced freight expenses.
In November 2023, shipments of Russian Urals crude oil to Turkey surged to an unprecedented 400,000 barrels per day (bpd), constituting roughly 14% of Russia's overall seaborne oil exports during that month.
Despite requests for comments, Russia's energy ministry remained silent, and both Turkey's energy ministry and STAR refiner, as well as Turpas, did not respond to inquiries. Prospects for increased supply to Turkey seem promising, particularly with the recent agreement between private Russian oil producer Lukoil and Azeri firm SOCAR. The deal involves the refining of up to 200,000 barrels per day of Russian oil at the STAR refinery in Turkey operated by Socar.
In addition to the surge in crude supplies, Turkey's imports of Russian diesel, heating oil, jet fuel, and marine fuel experienced a 200% spike in January-November 2023, reaching approximately 0.29 million barrels per day.
From January to November 2023, Russia supplied Turkey with 13 million tonnes of distillates, including 8.6 million tons of ultra-low sulfur diesel (ULSD 10ppm). This is in stark contrast to the 4.3 million tons of distillates, including 3.2 million tons of ULSD, supplied during the same period in 2022. Traders indicate that Turkey paid between $25 and $150 less per ton ($3.3-20 per barrel) for Russian diesel compared to prices for similar grades in the Mediterranean. Discounts for crude oil ranged between $5-20 per barrel.
The resultant decrease in energy import costs has empowered Ankara to narrow its trade deficit and alleviate the pressure on its currency, which has devalued by 30% thus far in 2023. Concurrently, Turkey has significantly increased its diesel exports by 120%, reaching 6.03 million tons compared to 2.75 million in January-November 2023.
Despite these economic advantages, several activists and supporters of Ukraine have accused Turkey of effectively assisting Russia in evading sanctions by facilitating the transit of Russian products to Europe. Turkey vehemently denies these allegations, emphasizing that it exports fuel refined from various types of crude oil.
