Turkish energy sector hit by lira depreciation: MUFG research

Istanbul — Turkey’s energy markets have been issued a warning message from the tumble of the lira, Japan’s MUFG research showed.

Register Now Turkey’s demand for transport fuel is expected to be limited by higher retail prices and domestic coal is seen taking a higher share in the power generation mix at the expenses of imported coal, according to the research.
In a briefing note, MUFG identified six ways in which the currency turbulence could affect Turkish energy markets, as the lira fell s further 7% against the dollar Friday, following threats from Washington.

Noting Turkey’s key role as a strategic oil and gas transit hub, MUFG warned that, as Turkey is almost totally dependent on imported crude oil, and heavily dependent on imported gas, the cost of these two commodities will continue to rise sharply in lira terms, with the cost of crude oil already having risen by 89% in lira terms since the start of this year.

Published in S&P Global, 17th August, 2018