The attempted coup in Turkey may boost oil prices through imperiling crude shipments through the country, a major energy-trade corridor.
Turkey’s army said it had seized power on Friday as warplanes flew over Ankara, the capital, and tanks blocked roads in Istanbul. Prime Minister Binali Yildirim said his government was still in control and will resist efforts by the military to take over.
At the crossroads of Europe and Asia, Turkey is a vital conduit of crude transport from Russia and Iraq to the Mediterranean Sea. Millions of barrels of oil travel through the nation’s waterways and pipelines each day. The nation is also on the fringe of broader conflict in the Middle East.
“Any uncertainty in that region almost invariably results in an increase in oil prices, particularly given the interaction between what goes on in Turkey with Syria,” Craig Pirrong, director of the Global Energy Management Institute at the University of Houston’s Bauer College of Business, said in a phone interview. Analysts will be looking to see whether there’s a “spillover to the major oil producers,” he said. Syria borders Turkey’s southeastern edge.
David Goldwyn, a former State Department special envoy and coordinator for international energy affairs during the Obama administration, said it was too early to assess the situation from an energy perspective.
The Turkish Straits, including the Bosphorus and Dardanelles, are one of the world’s major chokepoints for seaborne crude transit, with about 2.9 million barrels of oil passing through in 2013, the latest year for available data from the U.S. Energy Information Administration.
Turkey is also home to pipelines that transport crude and condensate from nations including Iraq and Azerbaijan to Ceyhan, on the Mediterranean in southern Turkey. Baku-Tbilisi-Ceyhan, a pipeline operated by BP, exported 67 million barrels of crude, or about 740,000 a day, from the port in the first quarter of 2016, according to BP. The flow to Ceyhan hasn’t been disrupted, according to a Turkish Energy Ministry official who asked not to be identified in line with government policy.
At least 10 crude tankers were signaling Turkish ports at the time of the attempted coup, according to data compiled by Bloomberg. They included six Suezmax and two Aframax ships bound for Ceyhan and two Aframax ships destined for the Turkish Straits.
Turkish state television reported Friday night that two bridges on the Bosphorus near Istanbul were closed to traffic by soldiers attempting the coup. The straits are closed to shipping traffic at night, meaning that the transport of oil through the channel may not become clear for several hours.
Source: Bloomberg
