As Turkey engages in a complex partnership with Russia in the energy industry, it raises questions about the value and potential risks involved. The country seems to have secured advantageous deals and significantly increased its imports, akin to finding a highly discounted sale on energy resources. However, there is a concern that this apparent economic gain may come with undisclosed consequences. Further details on this matter will be discussed below.
According to a recent report from Reuters, Turkey has become the main destination for Russian energy imports in the Western Hemisphere after Europe considerably decreased its imports of Russian oil and natural gas.
Despite its NATO membership, Turkey has opted to maintain its ties with Russia amid the Ukraine conflict, opting instead to strengthen economic collaboration and bilateral trade.
According to Reuters’ analysis based on data from the London Stock Exchange and estimates from traders, Turkish companies have pocketed approximately $2 billion in energy savings in 2023 by amplifying imports of discounted Russian oil and refined products.
The news source emphasized that Ankara is dedicated to increasing trade with its neighboring country, even in the face of sanctions from Western countries.
Reported data reveals a record surge in Russian Urals crude oil shipments to Turkey, reaching 400,000 barrels per day (bpd) in November 2023, representing about 14% of Russia’s overall seaborne oil exports that month.
Expectations suggest that there will be a rise in the amount of goods available in the upcoming months, as reported by trading sources referenced by Reuters.
From January to November 2023, Turkey experienced a significant increase of 200% in the amount of Russian diesel, heating oil, jet fuel, and marine fuel it received. This amounted to arround 290,000 barrels per day.
According to traders, Ankara has managed to obtain Russian diesel at prices that are $25 to $150 lower per ton (equivalent to $3.30 to $20 per barrel) compared to similar quality diesel in the Mediterranean. Discounts for crude oil were apparently between $5 and $20 per barrel.
Reuters pointed out that Turkey has been able to reduce its trade deficit and ease the strain on its currency, which has depreciated by 30% this year, thanks to the lower expenses related to energy imports.
Despite warnings from the US about potential penalties for Turkey if found aiding Russia in circumventing Western restrictions, Ankara has stood firm on its stance, affirming it has no intentions to support the sanction policy on Moscow, prioritizing its own prosperity and benefits over external pressures.
Hot take: Turkey’s energy bargain bin might be filled with discounts, but dancing with the bear might leave them with more than just sore toes.
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