The Impact of the Failed Turkish Putsch on Oil Markets

تم نشره في Thu 28 July / Jul 2016. 12:00 AM
  • Oil Barrels Prepared - (Reuters)

By: Leheb Ata Abdul Wahab
Iraqi Energy Economist

Although Turkey is looked upon as a peripheral oil producer with a total production of less than 43 thousand barrels per day, it however is an increasingly important transit hub for oil and gas supplies as from Central Asia, Russia, and the Middle East to Europe, as well as other Atlantic markets.

It is strategically located at the crossroads centring oil rich former Soviet Union, the Middle East counties, and European demand centres. It is home to one of the worlds’ busiest choke points, the Turkish Straits, through which almost 3 million barrels per day flowed in 2014.

There, the failed military coup led to a one day stoppage for ships crossing the Bosphorous on the 16th of July. Which denotes a reminder of the strategic importance of Turkey as a conduit connecting East (Asia) To West (Europe):

(1) The Role of Turkey as an Energy Hub: Fact File — The Bosphorous: One of the busiest water lanes in the world, with an estimate of 48 thousand vessels having crossed the Strait in 2014, carrying the equivalent of 3 per cent of the world’s maritime oil.

(2) A link To Caspian Sea Countries: Caspian Sea Countries, namely Azerbaijan and Kazakhstan utilize the Strait to transport daily 700 thousand barrels of oil to Turkish ports, including the Ceyhan on the Mediterranean, which also links Iraqi Exports from Kirkuk, and the Semi-Autonomous Kurdistan region with a potential capacity of 550 thousand barrels of oil, every day .

(3) A Major Consumer of Energy and Primary Commodities: In addition to its role as an energy hub, Turkey is a major consumer of commodities. It is ranked among the 5th largest consumers of natural gas in Europe, placing it on par with France. Turkey also has a refining capacity short of one million barrel per day, ranking among the 7th largest oil consumers in Europe, on par with Holland.

Moreover, Turkey relies heavily on its imports from Iraq, Iran, and Russia to fulfil its oil requirements, as well as natural gas imports from Russia and Iran, and to lesser extent from Azerbaijan

In conclusion, the military coup was short lived, with very limited impact on oil prices.

Usually, though, these events lead to panic among oil brokers and dealers lest it leads to a suspension in oil supplies; Security of Supply. However, the flow of oil from Turkish outlets was only suspended for less than a day with a negligible impact on prices.