The Structure of Türkiye’s Energy Exposure and Why Generation Policy Does Not Address It
ABSTRACT
The war beginning 28 February 2026 and the subsequent closure of the Strait of Hormuz produced a measurable shock to Türkiye’s external accounts. This analysis decomposes the shock by fuel, sector and time, shows that the transmission to 2027 exceeds the transmission to 2026 because of contract indexation lags, and argues that the exposure is a property of end-use demand rather than of the electricity generation mix.
1. The event and its immediate price transmission
United States and Israeli military operations against Iran began on 28 February 2026. Iranian forces declared the Strait of Hormuz closed from 4 March and acted against shipping attempting transit. Roughly a fifth of global oil supply and liquefied natural gas trade passes through the strait, and its narrowness, the absence of alternative seaborne routes and limited land-based bypass capacity make it the most consequential maritime chokepoint in the energy system.
Price transmission was immediate and differentiated by fuel. Between 28 February and 1 May 2026 Brent crude rose approximately 50 percent, European gas prices approximately 45 percent, and coal approximately 3 percent by the end of that window, having spiked more than 30 percent in March before returning close to pre-war levels in April as it became clear that coal supply was not directly affected.
2. Measured effect on Turkish accounts
Türkiye’s net energy imports in March, April and May 2026 — the first months in which the war was felt — increased by roughly 3 billion dollars against the same period of 2025, a rise of 26 percent. Extending May 2026 price levels across the remaining months of the year produces a full-year increase in excess of 14 billion dollars, equivalent to about 30 percent of the annual energy import bill. Roughly 8 billion dollars of that is attributable to oil and more than 6 billion to gas. Coal contributes approximately 95 million dollars, a rounding error by comparison.
The oil component decomposes further. Turkish crude oil imports cost 16.1 billion dollars in 2025 and refined products a further 20 billion. A rise of roughly 35 dollars per barrel between the onset of the crisis and May 2026 adds about 7.7 billion dollars to 2026 costs, of which approximately 5.2 billion — two-thirds — arises directly from road transport.
Supplier concentration explains why the effect operates through price rather than volume. Türkiye’s crude suppliers in 2025 were Russia at 46 percent, Iraq 15 percent, Kazakhstan 13 percent and Saudi Arabia 7 percent. Gas came from Russia at 36 percent, Azerbaijan 20 percent, the United States 16 percent, Iran 13 percent and Algeria 8 percent. Only a minority of supply transits Hormuz, so physical availability was largely maintained. Prices, however, are set globally, and a country importing 95 percent of its gas and 83 percent of its crude pays the global price regardless of where the molecules originate.
3. The lag structure and the 2027 problem
The most consequential feature of the shock is that its largest effect has not yet occurred. Turkish gas import contracts are weighted, on a volume-weighted basis at the end of 2025, approximately 60 percent to hub indexation and 40 percent to oil indexation, with oil price movements passing into contract prices after a lag of roughly nine months.
The hub-indexed portion has already begun to raise the 2026 bill, contributing an estimated 6.4 billion dollars if prices hold at May 2026 levels — of which 2.3 billion arises from residential consumption, 1.6 billion from electricity generation and 1.5 billion from industry. The oil-indexed portion has not. If prices remain elevated, the full pass-through raises additional gas import costs toward 13 billion dollars in 2027.
This matters for the disinflation programme. The Central Bank’s May 2026 Inflation Report set year-end forecasts at 26 percent for 2026, 15 percent for 2027 and 9 percent for 2028, raising interim targets to 24, 15 and 9 percent and suspending forecast-range communication in favour of point estimates. The assumption set includes Brent at 89.4 dollars per barrel in 2026 and 75.4 in 2027, import unit values rising 6.3 percent in 2026 and falling 0.2 percent in 2027, and end-2026 food inflation of 26.3 percent. The 2027 path requires the largest single-year fall in the sequence, from 26 to 15 percent, and it is precisely in 2027 that the delayed gas contract pass-through arrives.
4. Where the exposure actually sits
The policy conversation about Turkish energy dependence is conducted largely in terms of the electricity generation mix. The data show that this is the smaller part of the problem.
Türkiye’s net energy import bill in 2025 was 47 billion dollars, of which oil accounted for 47 percent, gas 43 percent and coal 10 percent. Broken down by consuming sector, road transport alone accounted for roughly 15 billion dollars, close to one-third of the total. Industry accounted for 8 billion, or 17 percent. Households and electricity generation each represented about 16 percent.
The share of renewables in electricity generation rose from 33 percent in 2015 to 43 percent in 2025, and wind and solar together reached 22 percent, exceeding hydroelectric output for the first time. This is a substantial achievement. It addresses roughly one-sixth of the import bill. The remaining five-sixths sits in sectors that burn imported fuel directly — vehicles, boilers, industrial heat — and is untouched by changes in the generation mix.
5. The electrification arithmetic
If exposure sits in end use, the instrument that reduces it is electrification of end use. The magnitudes are calculable.
One million electric vehicles on Turkish roads avoid approximately 900 million dollars in annual fossil fuel imports. There were more than 420,000 electric vehicles registered as of April 2026, and electric vehicles accounted for 17 percent of new car sales in 2025. The energy market regulator projects the fleet exceeding 5 million by 2035, which on the same coefficient corresponds to roughly 4.5 billion dollars in avoided annual imports.
Passenger cars, however, represent only 40 percent of road transport energy consumption. The remaining 60 percent is heavy goods vehicles, buses and vans, where electrification is technically harder and where no comparable policy programme currently exists. Extending electrification beyond passenger cars is where the largest untapped reduction lies.
Households offer a second channel. Residential gas consumption cost 7.2 billion dollars in imports in 2025, and roughly 90 percent of residential gas is used for space heating and hot water. Heat pumps deliver equivalent heating using approximately one third of the energy, drawn from domestically generated electricity. With roughly 25 million households, a 10 percent conversion rate removes over 1 billion dollars from the annual import bill, permanently and recurrently.
6. Alternative explanations considered
Three alternative readings deserve examination. The first is that the shock is transient and requires no structural response. This is contradicted by the record: net energy imports averaged 42 billion dollars annually over 2015–2024 and exceeded 80 billion in 2022 during the Russia–Ukraine energy crisis, reaching 8.6 percent of output. Two shocks of this magnitude in four years constitute a pattern rather than an anomaly.
The second is that domestic production solves the problem. Black Sea gas production is rising and Akkuyu will contribute roughly 10 percent of electricity when complete. Both reduce the bill; neither addresses road transport, which is the largest single component and runs on oil.
The third is that the burden is comparable to that of peer economies. It is not. Over 2015–2024 energy imports averaged 4.5 percent of Turkish output, second among G20 net importers behind South Korea at 5.1 percent, and higher than economies with greater energy consumption and higher income. The burden is structural rather than a function of temporary price levels.
7. Conclusion
The Hormuz shock is legible as a natural experiment on the structure of Turkish energy exposure. It confirmed that supply concentration is not the binding vulnerability, since physical availability held; that price exposure is, since the bill rose by roughly 30 percent without a supply interruption; that the transmission is lagged, with 2027 exposure exceeding 2026 exposure through contract indexation; and that the exposure is located in end-use demand rather than in the generation mix. The policy implication is uncomfortable because it is slow: the instruments that reduce the exposure — electrification of transport and heating, efficiency in industrial heat, and demand management — accumulate over a decade and cannot be accelerated by a supply-side announcement.
SOURCES
Ember (2026) ‘Hormuz crisis could cost Türkiye $14 billion’, 12 June 2026, including the published methodology annex on contract indexation weights and lag assumptions.
Central Bank of the Republic of Türkiye, Inflation Report 2026-II, 14 May 2026, medium-term forecast and assumption set.
Congressional Research Service, R45281, ‘Iran Conflict and the Strait of Hormuz: Impacts on Oil, Gas, and Other Commodities’.
Energy Market Regulatory Authority (EPDK), monthly petroleum and natural gas sector reports; electric vehicle and charging infrastructure projection.
TEPAV, analysis of Hormuz crisis exposure for Turkish industry and trade, March 2026.
Ember (2026) Türkiye Electricity Review 2026; International Energy Agency, The Future of Heat Pumps.
TÜİK, Foreign Trade Statistics, Chapter 27 series; Ministry of Trade monthly foreign trade tables.
Furkan Mahmut Tameroglu