Oil supplies from the Russian Federation to Turkey reached a record in December due to an increase in sea shipments from Baltic ports

As Kommersant has learned, Russian oil companies continue to increase seaborne oil shipments to Turkey, mainly from Baltic ports. In December, Turkey set a new record for the import of Russian oil – 444 thousand barrels per day, which is associated with an increase in supplies to the Turkish Star refinery, owned by the Azerbaijani SOCAR. In addition, the route to Turkey also contains logistical benefits compared to oil supplies through the Suez Canal.

In December 2023, Turkey imported record volumes of Russian oil by sea, which reached 444 thousand barrels per day (b/d), according to Kpler data (available to Kommersant). About 70% of these volumes were shipped at the Turkish port of Aliaga. The record figure achieved in December is about 13% of the total maritime exports of the Russian Federation in December. Another 76% of Russian maritime supplies abroad went to India and China. In November, Russia supplied about 432 thousand b/d of oil to Turkey, increasing imports by more than 100 thousand b/d compared to October.

According to Kpler estimates, about 85% of all Urals deliveries to Turkey in December came not from geographically close Novorossiysk, but from tankers from the Russian Baltic ports of Primorsk and Ust-Luga. Preliminary January data indicate that Russian oil exports to Turkey in January will also exceed 400 thousand bpd. Russian supplies to Turkey began to grow sharply in October, when LUKOIL began shipments to the Turkish Star refinery, which belongs to the Azerbaijani SOCAR.

Over the past year, Turkey has also been the largest importer of Russian diesel fuel (see Kommersant, December 15, 2023). A significant increase in supplies of oil and fuel to Turkey was a consequence of the sanctions embargo on oil and petroleum products (applied from December 5, 2022 and February 5, 2023, respectively), as a result of which the Russian Federation practically stopped supplies to Europe. Importers benefit significantly from the fact that Russian oil and petroleum products are trading at discounts amid Western sanctions. However, the size of the discounts fell significantly last year as Russia reduced overall maritime exports in coordination with Saudi Arabia.

Supplies to Turkey are becoming more attractive amid problems in the Red Sea caused by attacks on ships by the Houthis. So far, not a single ship carrying Russian cargo has been damaged and, as far as is known, has not been the target of attacks. However, Russian oil companies still reduced oil supplies through the Suez Canal to Asia, although such operations still accounted for about half of all maritime exports – 1.5 million b/d in December last year versus more than 1.9 million b/d in October. In December, most container lines and major oil companies suspended cargo transit through the Red Sea and Gulf of Aden, favoring the safer route through the Cape of Good Hope around Africa. However, the decrease in Urals supplies to Asia may be due not to the Houthi attacks, but to price disputes with the key consumer – India (see Kommersant on January 10).

Russia’s seaborne oil exports to Turkey in December last year slightly exceeded the similar figure in November, recalls Victor Katona from Kpler. If in previous months the state-owned Turkish company Tupras was the main buyer of Russian oil, “now it is neck and neck” with the Star refinery, where LUKOIL began to supply CPC Blend raw materials from its Caspian fields. Russia mainly supplies Urals to Turkey; other types of oil are supplied only “on a one-time basis.” “Given the sporadic inconsistencies between Russian oil exporters and Indian buyers, Turkey appears to have become the most attractive market for Russian oil,” says Mr. Katona, pointing out that oil prices to India are still relatively high for Urals (discount to Brent on the local market is about $3.5 per barrel). In turn, Urals in Turkey can trade at a discount to Brent of $5-6 per barrel, however, given the high cost of logistics through the Suez Canal, supplies to Turkey are still more profitable for Russian exporters, he concludes.

Dmitry Kozlov