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Russian oil to fill supply gap from U.S. sanctions on Iranian crude

Staff Writer |
The oil supply shortage in the Mediterranean market, which will emerge once the U.S. sanctions targeting Iranian oil come into force on Nov. 4, is predicted to direct the market toward Russian Ural oil, a case that will eventually lead to intensified sea traffic in Istanbul and the Çanakkale Straits.

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Due to effect delivery and payment processes, the effects of the sanctions to be imposed on Iran started to impact the market on Sept. 20, according to information compiled from the Iranian Embargo-Turkish Straits report prepared by the Bilkent University Energy Policy Research Center (EPRC).

Tanker traffic and delays in the Turkish Straits will increase refinery costs in the Mediterranean market, according to the report and thus, increase the pressure on the prices of petroleum products in the market in which Turkey is also also a player.

On the other hand, according to the report, it will not be possible for the Organization of Petroleum Exporting Countries (OPEC) to compensate for the supply gap that will occur after the sanctions are levied against Iran.

Saudi Arabia sends its oil to the Asian market dominated by China, while Iraq sends its oil more to European and American markets.

Moreover, Saudi Arabia is not expected to increase production in its oil fields due to technical problems in the medium and long term. It is also estimated that Iraq will not be able to close the gap due to its export capacity in Basra.

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