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Turkey and Turkish companies manage to save approximately $2 billion on energy bills in 2023

Turkey and Turkish companies have reportedly saved around $2 billion on energy bills in 2023 by significantly increasing imports of discounted Russian oil and refined products. Despite Western sanctions, Turkey has become the primary importer of Russian energy in the Western hemisphere, taking advantage of its proximity to Russian ports to realize substantial savings on freight costs.

Following Russia’s invasion of Ukraine, European countries reduced imports of Russian oil and gas, making Turkey the largest importer of Russian energy in the Western hemisphere. Estimates suggest that the country saved $2 billion on energy bills this year due to increased imports of Russian oil.

In November 2023, shipments of Russian Urals crude oil to Turkey reached a record high of 400,000 barrels per day, constituting 14% of Russia’s overall seaborne oil exports for the month. This surge in crude oil imports significantly contributed to Turkey’s energy cost savings.

Turkey has also witnessed a 200% increase in imports of Russian diesel, heating oil, jet fuel, and marine fuel from January to November 2023, reaching approximately 0.29 million barrels per day. Russia supplied Turkey with 13 million tonnes of distillates during this period, compared to 4.3 million tonnes in the same period in 2022.

This strategy of importing discounted Russian oil has proven economically beneficial for Turkey, with reported savings of between $25 and $150 per ton of Russian diesel and $5-20 per barrel for crude. These savings have played a crucial role in helping Turkey narrow its trade deficit and alleviate pressure on its currency, which has devalued by 30% this year.

While there are accusations from activists and supporters of Ukraine suggesting that Turkey is aiding Russia in bypassing sanctions, the country denies these claims, asserting that it is exporting fuels refined from various types of crude. Critics argue that Turkey’s actions may indirectly help Russia channel its products to Europe.

Turkey’s approach to save on Russian oil purchases is not unique, as India, refusing to join sanctions against Moscow, has also increased imports of Russian oil by 77% in 2023, saving roughly $2.7 billion. Both countries benefit from significant savings on freight rates compared to other importers. In the midst of these developments, Moscow and Ankara are engaged in discussions to set up a hub for Russian gas in Turkey, aligning with Ankara’s desire to become a major energy distribution hub for southern Europe. This initiative offers Russia an alternative route for its gas exports amidst reduced purchases by the EU.

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