Reuters: Turkey reduced Urals oil imports from Russia in May

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to Business FM on the causes and consequences of the decline in Russian oil supplies to Turkey.

The decrease in supplies is due to increased demand for Russian oil in Asia, primarily in India. Alexey Belogoryev comments:

— Currently, only oil that goes directly to processing and for the needs of the domestic market or for export to third countries outside the EU is being purchased. Since almost all Turkish exports of these products are aimed at the European market in one way or another, we are talking about the fact that only the domestic market remains. This is most likely due to the negative dynamics of supplies. Of course, given the unprecedented shortage that has developed on the market, Russian oil is in high demand, especially since there is also a relaxation of US sanctions, so Asian consumers are now buying Russian oil with great pleasure. Even those who previously tried to avoid it because of the threat of secondary sanctions and the availability of alternatives. The alternative is difficult on the market right now, there is objectively not enough oil, so right now and in the next few months, of course, the volumes that will be released in Turkey will find their buyer in Asia. Another thing is that this is still a temporary phenomenon. Sooner or later, the conflict in the Persian Gulf will end. The market will stabilize, and it will return to oversupply conditions. In autumn or winter, no one knows whether this will happen sooner or later, and under these conditions, the question of finding new sales markets will arise again. It is possible that Russian companies, using the experience of the crisis months, will be able to gain a foothold in additional markets besides India, China and Turkey, because so far this has not been possible, for the past four years almost all oil exports have gone to just three countries: India, China and to a lesser extent Turkey. There is hope that now it will be possible to unify.

— Will this situation affect the Urals discount in any way?

- No. Currently, the discount on Russian oil consists of logistical transaction costs, which are more or less stable, since little has changed here. There is a discount for the importer, which is practically non-existent now. On the contrary, Russian oil is often bought at small premiums, again, due to its high demand.