By increasing their imports of cheap Russian oil and refined products, Turkey and Turkish firms have been able to save almost $2 billion on their energy expenses in 2023, according to a calculation by Reuters based on data from LSEG and estimates from dealers. Despite the sanctions imposed by the West, Ankara is eager to increase its purchases from its neighbor.

Following Russia’s invasion of Ukraine, which caused European nations to cease the majority of their imports of Russian oil and gas, Turkey became the largest importer of Russian energy in the Western hemisphere. Compared to Turkey, China and India have imported more significant amounts from Russia. However, due to Ankara’s closeness to Russian ports, it can save more money than other importers due to lower freight.

According to LSEG statistics and estimates made by Reuters, the amount of crude oil sent from Russia to Turkey in November 2023 reached an all-time high of 400,000 barrels per day (bpd). This accounted for almost 14% of Russia’s total seaborne oil exports during that month.

The Russian Ministry of Energy refuses to comment on the matter. In response to requests for comments, the Turkish energy ministry, Turpas, and STAR refiner did not provide any responses.

According to sources in the trading industry, the private Russian oil producer Lukoil has signed a contract with the Azerbaijani company SOCAR to refine up to 200,000 barrels of its oil per day at Socar’s Turkish STAR refinery. This agreement will likely increase the amount of oil supplied to Turkey in the coming months.

In addition to the increase in crude supply, Turkey’s imports of diesel, heating oil, jet fuel, and marine fuel from Russia increased by two hundred percent between January and November 2023, reaching almost 0.29 million barrels per day.

From January to November, Russia provided Turkey with 13 million tons of distillates, including 8.6 million tons of ultra-low sulfur diesel (ULSD 10 ppm). This is in comparison to the 4.3 million tons of distillates, including 3.2 million tons of ULSD, that Russia sent to Turkey during the same period in 2022, according to LSEG statistics and dealers.

According to merchants, Turkey has been paying between $25 and $150 less for a ton of diesel from Russia this year, equivalent to $3.3–20 per barrel. This is compared to the rates paid for diesel of comparable grades in the Mediterranean. Regarding petroleum, it offered discounts ranging from $5 to $20 a barrel. With cheaper energy imports, Ankara has reduced its trade imbalance and alleviated some of the pressure on its currency, which has weakened by thirty percent so far this year.

According to the statistics provided by LSEG, Turkey has also boosted its diesel exports over the same period by 120%, reaching 6.03 million tons from 2.75 million tons in January–November 2023.

Several activists and supporters of Ukraine have leveled accusations against Turkey, claiming that Turkey is assisting Russia in circumventing sanctions by facilitating the shipment of Russian products to Europe. In response to the allegations, the nation asserts that it is engaged in exporting fuels that have been refined from various crude sources. Turkey is not the only country that has been able to save a significant amount of money on its oil imports from Russia.

Since the beginning of this year, India has increased its imports of Russian oil by 77%. India is another country that has declined to join sanctions against Moscow. Based on calculations derived from data provided by the government, it has been estimated that it has saved around $2.7 billion on oil imports from Russia in the first nine months of 2023. But India purchased far more Russian oil than Turkey did, to the tune of 1.7 million barrels per day, which meant that Turkey saved significantly more money per barrel.

It is estimated that it costs $6 million to transport a tanker full of Russian oil to Turkey, but it costs $9 million to transport the same tanker to India. Traders have stated that the savings may be realized on freight rates.

According to Viktor Katona, an analyst at Kpler, Turkey’s refineries have become some of the most lucrative facilities in the Mediterranean region following the imposition of sanctions by Russia in February 2022.

Katona reported that the oil refiner in Turkey, Tupras, had a gross profit margin of $30 per barrel over the previous year. This margin was $6 per barrel, more than the average margin for a complex refinery in the Mediterranean region. According to Tupras

Following the EU’s significant reduction in the amount of gas it purchases from Russia, Moscow, and Ankara are also exploring the possibility of establishing a hub for Russian gas in Turkey. Ankara has had a long-standing goal of becoming a significant energy distribution hub for southern Europe, and this plan helps Ankara achieve that goal.

As a means of re-routing its gas exports from Europe or selling some gas into the EU in an indirect manner, Russia views the hub as a potential opportunity.