How Will the Iran Oil Embargo Affect Turkey? #TurkeyUS
Necdet Pamir says Turkish companies that purchase crude oil from Iran will be facing difficult times, and that the US sanctions will cause the oil prices to rise.
Turkey imports 94% of the crude oil which it uses for 31% of all of her energy consumption. Our energy dependency in oil, natural gas, and coal is one of the main reasons of our current account deficit. This is quite unfortunate as Turkey is quite rich in terms of renewable energy resources. To put it into numbers, we can produce two times the 290 billion kw/hr. we used last year with our renewable resources alone.
In 2017, Turkey imported 25.77 tons of crude oil and 16.88 tons of crude oil products. We imported only crude oil from Iran which accounted for 27% (11.49 million tons) of our total oil imports. This is a significant proportion.
Short History of the Embargo
USA has been applying various embargos toward Iran on and off since 1974. China, France, Russia, UK and Germany all of whom have large trade volumes with Iran have been working towards the lift those sanctions since 2015. A Joint Comprehensive Plan of Action (JCPOA) was signed to that effect, however Trump withdrew the US from the agreement recently, which shows the US’ determination in enforcing the embargos to their full weight even at the risk of falling out with the countries that keep buying oil from Iran. A significant part of USA’s embargos is already supported by the UN and European Council. US says that all banks, including foreign ones, have to comply with the Patriot Act. Those who don’t are pushed out of US financial system. Directors of Halk Bank are being tried because of this very reason.
It Will Have an Impact on Companies That Purchase Crude Oil from Iran
The decision to halt oil imports from Iran will affect companies that do the actual purchasing. Those that defy US’ will are going to be pushed out of US financial system. If the Office of Foreign Assets Control (OFAC) enlists a company under their list of sanctioned companies, it will not be able to conduct any financial transaction with any other bank, not even for a tiny funds transfer.
The Collocutor Now is the Iraqi Government
Companies that are enlisted in the sanctions list have been known to go bankrupt quite fast. If a company comes face to face with the US government, it may expect to be subjected to even harsher sanctions and conditions than they would have under the Obama administration. Time will show if AKP can stand against the US pressure. If it throws in the towel, it will have to find other resources for its petroleum needs. We used to import a large chunk of our oil from Northern Iraq. If we have to go back to them, then we will have to sit down and talk with the Iraqi central government soon.
Zarrab and Zencani Method is Out
It doesn’t seem likely that we can keep doing the same type of deals we used to do, through Zarrab and Zencani’s oil for gold deals. Sanctions are in order for any Turkish company that is proven to purchase oil from Iran.
Whatever angle we look at the situation from, it is very likely that the aggressive policy of the US towards Iran will cause a spike in oil prices. And, Turkey, in effect, will face a higher imports bill and thus, a larger current account deficit.
Originally published in Turkish at :https://www.sozcu.com.tr/2018/ekonomi/iran-petrol-ambargosu-turkiyeyi-nasil-etkiler-2494169/