The war between the U.S., Israel and Iran launched on Feb. 28, 2026, created a systemic risk area. As the first month of the war approached at the end of March, the clearest message from financial markets was this: This crisis is no longer just a financial shock affecting countries' risk premiums, but a macroeconomic shock impacting supply and demand dynamics.
Understanding this phase does not require complex analyses at the first stages. Two critical variables determine the impact of the war: duration and scope. Looking at the current situation, it appears that the duration of the war is largely determined by the U.S., whereas Iran has the capacity to shape its geographical scope through regional expansionist measures. The U.S. aims to control costs by keeping the war within a limited time framework, while Iran aims to spread the impact regionally through various actions. Therefore, the real question is "How long will it last and how widespread will it be?"
It is clear at this point that the Strait of Hormuz has become a critical threshold for the global economy. This narrow passage, through which approximately 20 million barrels of oil pass daily, carries about 20% of the global oil trade. In fact, the issue is not just oil; petrochemical products, liquefied natural gas and critical intermediate goods for industry are also transported through this route. More importantly, alternative capacity that can replace this flow in the short term is quite limited. Therefore, a disruption in the Strait of Hormuz would mean a shift from cost-based pricing to scarcity pricing in energy markets. It is becoming increasingly clear that this situation will determine food and energy prices.
Indeed, the increases in oil prices observed in recent weeks are giving the first signals of this transition. While prices are expected to stabilize in the $85-$100 range in a short-term war scenario, if the conflict prolongs or there is a disruption in the Strait of Hormuz, the $120-$150 range is now a strong possibility. This situation means not only an increase in costs for energy-importing countries, but also a direct rewriting of macroeconomic balances.
From Türkiye's perspective, energy prices remain the most critical channel for external shocks. Central bank calculations show that every 10% sustained increase in oil prices adds approximately $2 billion annually to the current account balance. Such a scenario may result in the current account deficit as a percentage of national income climbing from around 2% to 3.5%. It should not be overlooked that this would not only change the numerator but also the denominator, meaning that growth would also decrease.
One other crucial parameter in terms of external balance is trade with the Gulf countries. These countries, according to TradeMap data, which account for approximately 5% of our foreign trade, are at the center of the war. The decrease in tourism revenues is also an inevitable consequence of the war. On the other hand, the fact that there is currently no significant domestic demand for foreign currency is a significant advantage in terms of external balance.
However, the impact of supply shocks, particularly in energy, is not limited to the external balance. As for internal balance, while the Turkish economy is at the most critical stage of its disinflation process, it is now facing strong inflationary pressure driven by costs. Increases in energy, food and logistics costs are rapidly being reflected in consumer prices via producer prices. Central bank estimates suggest that an energy shock of this magnitude could push annual inflation up by approximately 2.5%-3% points. It is also known that the “echelle mobile” system, which partially passes fuel price increases on to consumers, will impose a burden on the public sector.
More importantly, this effect is not a one-way process. Increases in energy and logistics costs are reflected in fertilizer prices via natural gas costs, and from there, with a delay of several months, in food prices. Governmental data of Türkiye says annual fertilizer consumption is 6-7 million tons. This shows that dependence on foreign sources and the fight against inflation may become a longer-term and more complex process. On the industrial front, the risks are less apparent now, but their impact is far greater. Products transported via the Strait of Hormuz are not limited to energy inputs; petrochemical products, essential raw materials for the plastics, textiles, automotive and packaging industries are also part of this route.
On the other hand, global financial conditions also play a significant role in this equation. Rising energy prices could push inflation higher in developed economies, leading central banks to delay interest rate cuts. This means global liquidity may remain tight. For developing countries like Türkiye, this creates pressure from two directions: On the one hand, the rising energy bill, and on the other, increasingly difficult external financing conditions. Gold prices are also affected by persistently high interest rates. Now, central banks are selling gold from their reserves to reduce the impact of financial volatility. This led to a decline in gold prices. All financial assets will remain highly volatile if the conflict continues.
Despite all these risks, some structural advantages of the Turkish economy are noteworthy. The fact that the total debt-to-GDP ratio is below 100%, the budget deficit hovers around 3%, and the banking system has a strong capital structure provides a significant buffer against external shocks. Today, the share of renewable energy in electricity production is approaching 50%, and the decrease in energy intensity has significantly increased Türkiye's capacity to absorb energy shocks compared to previous periods.
The current situation can be summarized with three alternative scenarios. If the war remains short-lived and limited, oil prices could stabilize in the $80-$90 range, and the Turkish economy could weather this period with limited damage. In a medium-term scenario, prices settling in the $100-$120 range would create more significant pressure on inflation and the current account deficit. In the worst-case scenario, if the war is prolonged and geographically expanded, oil prices rising above $120 could trigger a global stagflation risk. This could create serious problems for the Turkish economy, leading to below-potential growth. In conclusion, viewing today's developments solely as an energy crisis is incomplete. The duration and scope of the war are important. How these two variables unfold will also determine the direction of global growth, inflation and financial stability.
For Türkiye, this process is a turning point and an opportunity. Strengthening energy supply security, rapidly deploying domestic and renewable resources, diversifying supply chains and trade routes, and transitioning to value-added production in industry are critical policy areas of the period that began with the war. Global crises always generate risks. However, when managed correctly, they also offer an opportunity to gain a stronger position in new economic balances.
