Turkey to cut Iran Oil Imports By a Tenth

Turkey said on Friday it will cut imports of oil from Iran by a tenth, ceding to US pressure a week after Washington warned Tehran’s customers they could incur US sanctions unless they significantly reduce purchases.

Pressure from Washington and Brussels, which will slap a EU-wide embargo on Iranian oil from July as part of a campaign against Tehran’s nuclear program, has led to a rally in oil prices this year as markets fear supply shortages.

The West’s energy watchdog, the International Energy Agency, has warned that Iran might have to halve its exports by around 1 million barrels per day later this year because of the EU embargo and as its four biggest customers — China, India, Japan and South Korea — are also cutting imports.

Turkey, the fifth largest buyer of Iranian oil, had previously refrained from committing to lower imports, saying it had long-established relations with its neighbor Iran and was too dependent on its oil.

Its statement on Friday effectively leaves China as the only country that has yet to commit officially to cutting imports in a move that would potentially further squeeze Tehran’s stretched finances, which rely heavily on oil revenues.

Turkey’s Energy Minister Taner Yildiz said on Friday the country would reduce purchases by around 10 percent and Turkey’s sole refiner Tupras, a unit of Koc Holding, said it would cut imports by 20 percent.

“We plan to increase the number and the route of countries we buy oil from,” Yildiz said, adding Turkey will partly replace the oil with 1 million tons it expects to buy from Libya.

The country is also in talks with Saudi Arabia on spot oil purchases and longer term contacts, he added.

Turkey imports around 200,000 barrels per day of oil from Iran, representing 30 percent of its total imports and more than 7 percent of Iran’s oil exports.

Having been omitted from a list of countries granted exemptions by Washington, Turkey remained hopeful of obtaining a waiver to avoid US financial sanctions.

The United States exempted Japan and 10 EU nations from sanctions because they have significantly cut purchases of Iranian crude oil, but left Iran’s top customers China and India exposed to the possibility of such steps.

Tupras, the main Turkish customer, currently buys some 30 percent of its crude oil from Iran, and it has an 9 million tonnes annual purchase contract.

Koc Energy Group Chairman Erol Memioglu told reporters last month that the existing Tupras oil contract with Iran ends in August.

He said that he expected more clarity on the details of the sanctions in May, before Washington’s measures on oil-related transactions take effect on June 28.

Both the United States and the European Union have imposed unilateral sanctions against Iran’s financial and energy sectors over its nuclear program, whereas Turkey has said it is only compelled to observe UN sanctions.

Trade between Turkey and Iran has risen sharply over the past decade, leading to Turkey being regarded as a possible weak link in the international sanctions against Iran.

Iran says its nuclear program is solely for civilian purposes, and denies that it is building weapons. A meeting between Iranian nuclear negotiators and representatives of six major powers is expected on April 13, with Istanbul a possible venue for the talks.

Tupras shares were little moved after the announcement, up 1.6 percent at 45.2 lira  ($25.36) by 1400 GMT.