It’s been just a few, short weeks since Turkish President Recep Tayyip Erdogan put down a failed military coup in his home country. In a decisive show of strength, the man who has been called a ruthless dictator restored order to Turkey with 24 violent hours. The day after the Friday coup, Erdogan prosecuted traitors publicly. Though the country is on its way back towards some kind of normalcy, the impacts of the failed coup are reverberating around the world, and the United States’ oil and gas industry isn’t immune.
According to USA Today, “Turkey is very weakened. Economically, [the coup is] going to hammer Turkey. Diplomatically, people are going to treat it with kit gloves. Mostly, foreign investment is going to flee.”
The downturn comes at a terrible time for the country, which is already in the throes of economic turmoil. As the country is tied irrevocably to the price of oil, Turkey was already looking at dark times thanks to decreased movement of the product through their borders. In good times, Turkey makes big time bucks helping the world gain access to the Middle East’s bountiful supply of oil.
So, what does this mean for you?
The turmoil in Turkey threatens one of Europe’s most important petroleum and natural gas gateways. At the moment, two pipelines are threaded through the country with more planned. Thanks to its valuable position, the European Union considers Turkey a “strategic partner”. Essentially, that means that the EU is counting on stability in a country that hasn’t exactly been a model of that particular trait.
Should Turkey’s relationship with the EU be strained beyond repair (which could happen), the stemmed flow of oil to Europe could be disastrous.
All that being said, the world relies on oil and natural gas to move. If the experts are to be believed, the potential fallout from Turkey’s failed coup could mean that foreign investors look to more serene political terrain when they’re planning their next project. Even without that far flung idea in mind, the unrest in Turkey has already spiked an increase in oil prices for the moment.