The future of war and Turkey

The war that began with the attack by the US and Israeli gang on Iran has completed its first week. First of all, as a human being, I note the suffering of the war they started by massacring 168 girls so that it will not be forgotten, and I condemn the US imperialism + Israeli Zionist alliance. I want to touch upon the effects of the war on the Turkish economy. However, I would like to make a few assessments regarding the course of the war and oil prices.

When I combine the geopolitical assessments of retired admiral Cem Gürdeniz with the analyses of my dear friend Tolga Uysal, who knows the oil and commodity markets very well, I can make the following assessment:

CUBA, BRENT, AND AMERICAN OIL…

This war will not be as short as the US claims. Iran has not closed the Strait of Hormuz, but it has effectively ensured its closure. It seems the Strait of Hormuz will not open easily. 20 percent of the world's oil and natural gas shipments cannot take place. This is the main pillar of Iran's strategy to prolong the war. The war preparations made by Iran support this strategy. The bill for 20 percent of the world's oil and natural gas supply not being able to reach the market will cause the US to lose its allies all over the world.

China is not intervening openly, but it knows that it will win over the allies the US has lost without fighting. It has already won over many countries in the Belt and Road Project and in Africa without fighting. Now it is the turn of the US's loyal allies... The prolongation of the war means that the US is preparing itself for the end, and that the power of the US-controlled international payment system SWIFT, along with the dollar's status as a reserve currency, is weakening. With the new international payment system CIPS developed by China, it is advancing slowly but surely without any fighting at all.

Because Brent crude is of higher quality, it is always 3-4 dollars more valuable than American oil. When the war started, the price gap between Brent crude and US oil widened from 4 dollars to 9 dollars. However, at the end of the first week, the situation changed. Brent crude gained 27 percent and US oil gained 35 percent in value. The difference between them fell to 2 dollars. Brent crude reached 93 dollars and American oil reached 91 dollars. It would not be a surprise if Brent crude exceeds 100 dollars at the beginning of the week. The US tried to squeeze China through oil prices, but it got caught in the trap itself. The increases in US oil prices put Trump in a difficult position. Although the US has a stock of 600 million barrels, it did not put this into play to lower prices, but 91-dollar US oil will lead to grumbling in American society.

Furthermore, Trump's statement that he will invade Cuba in a short time while a major attack is ongoing in the Middle East is an indication of how difficult a position he is in regarding the Middle East and Iran. The prolongation of the war will increase its economic cost and military losses. Trump is in search of a victory for the US public. While he first said he would finish Iran's business in four days and then in 4 weeks, his sudden turn toward Cuba is a sign of his effort to cover up his failure against Iran.

Of course, there is a high probability that predictions made during ongoing hot conflicts will not hold true. However, I found these points important in terms of mental gymnastics.

HOW WILL THE TURKISH ECONOMY BE AFFECTED?

In the Central Bank's 16 percent inflation targeting, the average annual oil price projected for 2026 was around 65 dollars. Although none of the inflation forecasts made by the Central Bank to date have held true, they had stated in one of their studies that a 10-dollar increase in oil prices would add 1 point to inflation. Accordingly, as a result of the increase in oil prices, annual inflation will increase by 3.5-4 points according to the Central Bank. It will be 20 percent, not 16 percent. However, the Central Bank's 16 percent target was not realistic. Even before the war broke out, the total inflation in the first month of the year was 7.95 percent. I don't know what TUIK will say, but by the end of the year, ENAG inflation or household inflation expectations could exceed 60 percent.

Not only oil, but natural gas prices are also increasing. The increase in natural gas prices means an increase in heating and electricity production costs, as well as an increase in fertilizer prices. Food prices, which could not be reined in anyway, will also exceed expectations. Even before these cost increases were reflected in producer prices, fresh vegetable and fruit prices showed sudden spikes due to the influence of opportunists in the markets and bazaars.

The increase in oil prices will also affect our foreign deficit. Turkey's net energy imports were 47 billion dollars in 2025. The main reason for the 25 billion dollar current account deficit we have is energy imports... As a result of the prices formed due to the war today, our net energy import bill for 2026 will increase from 47 billion to 65 billion dollars. By the end of the year, our current account deficit could reach 45-50 billion dollars.

Both inflation will increase and our current account deficit will grow. As a result of the growth of the current account deficit, there are two paths to choose from. Either the exchange rate will be left to float. This will reduce the current account deficit and increase the inflationary effect. Or, as has been done for a long time, the government and the Central Bank will suppress the exchange rate with interest rates. We will find foreign currency from abroad with higher interest rates, and we will transfer more resources from Turkey to abroad, and domestically from the poor to the wealthy segment that lends to the state, and interest payments in the budget will swell.

When the war broke out, the arrest and dismissal of Bolu Mayor Tanju Özcan on ridiculous grounds also shows that the negative effects of non-economic factors on the market will continue to increase.