Insight: Turkey absorbs more base oils from Europe

Turkey took delivery of a larger-than-usual volume of base oils of European origin in February and instead cut back imports from Russia.

Turkey is increasingly important as a key outlet for Russian base oils supplies following Europe’s ban on oil product imports from Russia earlier this year.

A surge in Russian base oils shipments to Turkey since the middle of last year reflected its importance.

The shipments also cut Turkey’s requirements for base oils of European origin, forcing those supplies to move to other markets instead.

The dynamic reversed in February as European producers prioritized the clear-out of surplus supplies over the price of the supplies.

The trend replicated the strategy used to attract demand for Russian base oils.

The average price of shipments from Italy to Turkey fell by $300/t in February from the previous month.

The average price of supplies of Russian origin fell by $120/t during the same period.

The narrower price discount of Russian base oils to supplies from Europe in turn boosted interest in shipments from markets like Italy.

Surplus European cargoes had moved to outlets like Latin America, West Africa and Mideast Gulf late last year and early this year.

The flows had eased the impact of the slowdown in shipments to Turkey.

Surplus Russian cargoes face more difficulty moving to any of those markets.

The difficulty highlights the importance of Turkey as an outlet for Russian supplies and their more limited options in case of a slowdown in shipments to the country.