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Russia-Turkey Trade Chills after Latest U.S. Sanctions Threat

Trade between Russia and Turkey has suffered a setback since late December with some payments for imported Russian oil cargoes delayed, as banks are boosting compliance checks following a U.S. threat to sanction financial institutions for facilitating business with Russia.

In December, U.S. President Joe Biden issued an executive order, which authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to potentially impose sanctions on a foreign financial institution if it is found to have “conducted or facilitated any significant transaction or transactions for or on behalf of any person designated” in the sanctions against Russia.      

As a result of this new sanctions threat, payments have been disrupted with some delays seen in payments for oil cargoes which Turkey imports from Russia, multiple sources with knowledge of the situation have told Reuters.

Turkey is a major buyer of Russian crude and petroleum products. It imports 5% of Russia’s crude oil exports, and is the top buyer of Russia’s oil products, having purchased 24% of Russia’s oil products since the EU embargo on Russian oil came into effect a year ago, per data from the Centre for Research on Energy and Clean Air (CREA).

Now Turkey has started to experience payment issues for oil imports, according to Reuters’ sources. The reason is that Turkish banks have started reviewing business dealings and are tightening compliance with Russian clients, four of the sources told Reuters.  

Oil flows to Turkey haven’t been disrupted as only a few cargoes have been delayed.

Payment issues have not “impacted day-to-day functioning but reminds us that a problem could arise any time,” a Turkish oil industry source told Reuters.   

The tougher enforcement of the G7 sanctions and related payment issues have been also holding up Indian purchases of some cargoes of Russian crude oil, with tankers previously headed to India turning back eastwards, tanker-tracking data monitored by Bloomberg showed early this year.

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By Charles Kennedy for Oilprice.com

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