Bad news for Turkey from Russia: Turning off the taps!

Russia has imposed a six-month ban on the export of petroleum products starting March 1, citing reasons such as keeping prices stable in the face of rising demand from consumers and farmers, and allowing for maintenance at refineries in the country, which is the world's second-largest oil exporter.

The ban, first reported by the Russian media outlet RBC, was confirmed by a spokesperson for Deputy Prime Minister Alexander Novak, an advisor to President Vladimir Putin responsible for Russia's vast energy sector. Citing an unnamed source, RBC stated that Prime Minister Mikhail Mishustin had approved the ban proposed by Novak on February 21.

According to the report on ekonomim.com, Novak said in his proposal, "In order to balance the excessive demand for petroleum products, it was necessary to take measures that would help stabilize prices in the domestic market."

RUSSIA'S LARGEST SOURCE OF FOREIGN CURRENCY

Exports of oil, petroleum products, and gas are by far Russia's largest exports. These items are a significant source of foreign currency for the 1.9 trillion dollar economy and ensure Moscow remains at the top table of global energy policy.

The Kremlin works with Saudi Arabia, the world's largest oil exporter, to keep prices high as part of the OPEC+ group, which includes members of the Organization of the Petroleum Exporting Countries (OPEC) as well as key allies.

As part of OPEC+'s efforts to support prices, Russia voluntarily reduced its oil and fuel exports by 500 thousand barrels per day in the first quarter.

This decision by Russia will most significantly affect Turkey. According to calculations made by Reuters based on LSEG data and company estimates, Turkey and Turkish companies saved approximately 2 billion dollars on their 2023 energy bills by increasing imports of discounted Russian oil and refined products. Despite Western sanctions, Ankara had also increased its initiatives to purchase more from its neighbor.

SHIPMENTS TO TURKEY AT ALL-TIME HIGH

According to LSEG data, Russia's crude oil shipments to Turkey rose to an all-time high of 400 thousand barrels per day (bpd) in November 2023, accounting for approximately 14 percent of Russia's total seaborne oil exports.

Trade Ministry sources had stated that supplies to Turkey were expected to increase further in the coming months following an agreement signed by private Russian oil producer Lukoil with the Azerbaijani company SOCAR to refine up to 200 thousand barrels of oil per day at Socar's STAR refinery in Turkey. In addition to the increased crude oil supply, Turkey's imports of Russian diesel, heating oil, jet fuel, and marine fuel increased by 200 percent in the January-November 2023 period, reaching approximately 0.29 million barrels per day.

According to LSEG data and companies, Russia supplied 13 million tons of distillates to Turkey in the January-November 2023 period, 8.6 million tons of which were ultra-low sulfur diesel (ULSD 10ppm), while this figure was 4.3 million tons of distillates, 3.2 million tons of which were ULSD, in the same period of 2022. According to calculations, Turkey pays 25 to 150 dollars less per ton (3.3-20 dollars per barrel) for Russian diesel compared to the prices of similar qualities in the Mediterranean this year. For crude oil, it makes purchases at a discount of between 5 and 20 dollars per barrel.

News Source: 12punto