Falling oil prices, driven by escalating trade tensions between the United States and China, could offer much-needed relief to Türkiye’s current account balance, according to analysts.
Brent crude settled at its lowest since February 2021 on Monday, driven by an OPEC+ decision over the weekend to further speed up oil production hikes for a second consecutive month.
It bounced back on Tuesday to gain more than $1.50 per barrel, rebounding on technical factors and bargain hunting.
Brent crude futures rose $1.67, or 2.8%, to $61.90 a barrel by 9:27 a.m. GMT on Tuesday, the first gain after six consecutive declines, while U.S. West Texas Intermediate crude added $1.61, or 2.8%, to $58.74 a barrel.
Driven by expectations that production will exceed consumption, oil has lost over 10% in six straight sessions and dipped over 20% since April, when U.S. President Donald Trump's tariff shocks prompted increased bets on a slowdown in the global economy.
The return of Chinese market participants after a five-day public holiday since May 1 was also seen supporting prices on Tuesday.
Turkish officials have recently repeatedly voiced the positive impact that the declining oil prices would have in helping curb the country’s current account deficit.
"Türkiye is among the countries that will benefit the most from the decline in oil prices. The moderate trend in oil prices, tightening domestic financial conditions, and fiscal policy will contribute to disinflation in the coming period," Treasury and Finance Minister Mehmet Şimşek said.
Professor Erhan Aslanoğlu of Istanbul Bilgi University noted that energy and oil prices constitute a substantial portion of Türkiye's current account deficit.
He estimated that a $10 decrease in oil prices could lead to approximately $4 billion to $5 billion in savings for the country.
"These developments could reduce the current account deficit by 20%-25%," Aslanoğlu told Anadolu Agency (AA).
"Considering the overall trajectory of both the domestic and global economy, a slowdown in consumer goods imports may also contribute positively to the current account balance. However, on the macroeconomic front, there could be negative effects on growth and inflation," he explained.
Aslanoğlu also pointed out certain challenges in maintaining competitiveness in exports, but he noted that initiatives taken by European countries in the defense industry are expected to have a positive impact on Türkiye's export performance.
The sharp rise in oil and natural gas prices after Russia launched its invasion of Ukraine in February 2022 had pushed Türkiye's energy imports to $96.5 billion and the current account deficit to $48.8 billion.
Those figures dropped to $64.6 billion and $10 billion, respectively, last year amid a decline in prices, said Spectrum Audit and Consultancy Chair Tuncay Inci.
"Türkiye has recently been importing an average of 49 million tons of petroleum and petroleum products annually. Energy accounts for a significant portion of total imports," Inci noted.
"Brent crude has dropped from $80 to around $60 per barrel. This decline will allow Türkiye to spend less foreign currency on these products, contributing to a reduction in the current account deficit."
On Saturday, OPEC+ agreed to further speed up oil production hikes for a second consecutive month, raising output in June by 411,000 bpd.
The June increase by eight participants in the OPEC+ group, which includes allies like Russia, will take the total combined hikes for April, May and June to 960,000 bpd. That represents a 44% unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to calculations.
Following the OPEC+ decision, Barclays reduced its Brent forecast by $4 to $66 a barrel for 2025 and by $2 to $60 for 2026, while ING expects it to average $65 this year, down from $70 previously.
Goldman Sachs also lowered its forecast on Monday and now expects Brent crude to average $60 per barrel for the rest of 2025 and $56 in 2026, down by $2 from its previous estimate.
Despite the positive impact, Inci stressed the need for further structural measures to reduce energy imports to narrow the current account gap. He highlighted the importance of increasing investment in renewable energy and continued exploration of oil and gas reserves.
Inci also highlighted agriculture and tourism as sectors that could help maintain a balanced current account.
"If oil prices decline by $10 and natural gas prices follow suit, we anticipate a $4.5 billion decrease in the deficit," he noted.
The government's medium-term program projects a $28.6 billion current account deficit in 2025.
"But if Brent crude, which started the year at $75-$80 per barrel and fell to around $60 due to Trump's tariff policies, continues its downward trend, we estimate that the deficit could drop to around $20 billion," Inci said.
Beyond reducing the gap, Inci stressed the importance of boosting economic growth.
"Türkiye should explore ways to boost its exports amid the global economic slowdown. Türkiye is currently on the U.S. list of countries with the lowest tariffs, which is a significant opportunity for our country," he noted.
"Therefore, expanding market diversification in exports would also be beneficial for the country."
