Turkish Straits and an Important Oil Price Benchmark: Urals

Ayasli D. E., Yalcin Y., Sahin S., Berument M. H.

Energy Journal, vol.44, no.4, pp.277-300, 2023 (SCI-Expanded) identifier

  • Publication Type: Article / Article
  • Volume: 44 Issue: 4
  • Publication Date: 2023
  • Doi Number: 10.5547/01956574.44.4.daya
  • Journal Name: Energy Journal
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Scopus, Academic Search Premier, PASCAL, Periodicals Index Online, ABI/INFORM, Agricultural & Environmental Science Database, Business Source Elite, Business Source Premier, Communication Abstracts, EconLit, Environment Index, Index Islamicus, Pollution Abstracts, Public Affairs Index, vLex, Civil Engineering Abstracts
  • Page Numbers: pp.277-300
  • Keywords: Congestion, Crude oil prices, Non-linear model, Smooth Transition Regression model (STR), Turkish Straits
  • Ankara Haci Bayram Veli University Affiliated: Yes

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.