Turkish Straits and an Important Oil Price Benchmark: Urals

Duygu Ekin Ayasli, Yeliz Yalcin, Serkan Sahin and M. Hakan Berument

The Energy Journal, 2023, vol. 44, issue 4, 277-300

Abstract: The Turkish Straits is one of the busiest waterways in the World. Around 4% of the world’s crude oil trade passes through the Turkish Straits. We model the CIF Mediterranean price of Urals crude, one of the world’s most critical medium gravity crude brands that passes through the Turkish Straits. The empirical evidence provided here suggests that congestion (measured in terms of the waiting time for entering the Turkish Straits) increases the CIF Mediterranean price of Urals crude up to 5.05% and 3.09% for the İstanbul and Çanakkale straits, respectively. However, similar supporting evidence could be found for neither an important benchmark oil (Brent) nor Iranian Light, which has similar characteristics and can be considered a close substitute for Urals crude in the Mediterranean refinery market. This shows that the Turkish Straits have an important impact on the price of this important medium crude oil in world oil markets.

Keywords: Turkish Straits; Crude oil prices; Congestion; Non-linear model; Smooth Transition Regression model (STR) (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:44:y:2023:i:4:p:277-300

DOI: 10.5547/01956574.44.4.daya

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