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Recent U.S. sanctions threats targeting financial firms doing business with Russia have caused a disruption in Turkish-Russian trade, impacting payments for both imported oil and Turkish exports, according to sources familiar with the matter.
The executive order issued by the U.S. in December, while not explicitly targeting energy, has complicated payments for Turkish imports of Russian crude oil and Russian payments for a wider range of Turkish exports. These sanctions aim to diminish Kremlin revenue and disrupt its activities in Ukraine without significantly affecting global oil markets or causing a spike in U.S. gasoline prices, particularly important as President Joe Biden seeks re-election later this year.
Despite the disruption, crude oil supplies to Turkey have not been significantly impacted, with only a small number of shipments experiencing delays. However, Russian oil exporters have reportedly not received payments from Turkey for several weeks, indicating challenges in executing energy transactions due to the sanctions threat.
The emerging payment issues stem from Turkish banks revising their business practices and implementing stricter compliance measures with Russian clients. While these measures have not halted Turkey’s crude oil supplies, they have led to delays and disruptions in payments, necessitating adjustments to payment methods and schedules.
Ankara, while critical of Russia’s invasion of Ukraine, opposes Western sanctions on Moscow and has maintained close ties with both Russia and Ukraine throughout the conflict. However, pressure from the U.S. to enforce sanctions has prompted Turkish banks to tighten rules on Russian clients, potentially affecting trade relations between the two countries.
The disruption in Turkish-Russian payments began following the U.S. executive order in December, which threatened financial institutions facilitating transactions for entities targeted by U.S. sanctions with penalties. Russian authorities have acknowledged the challenges faced by Turkish banks in dealing with Russian clients under heightened U.S. pressure and have pledged to work with Turkey to find solutions.
While the full extent of the impact on Turkish-Russian trade remains to be seen, the recent developments highlight the complexities of international trade relations amidst geopolitical tensions and the far-reaching effects of U.S. sanctions policies on global trade dynamics.
