26.04.2025 14:41
The sharp decline in oil prices, triggered by concerns over the global oil demand due to the new tariffs announced by U.S. President Donald Trump, is expected to create advantages for energy-importing economies like Turkey.
With the announcement of new customs tariffs by U.S. President Donald Trump raising concerns about global oil demand, it is expected that the sharp decline in oil prices will create advantages for energy-importing economies like Turkey.
The announcement on April 2 that Washington would impose an additional tax of at least 10% on products imported from many trading partners has raised fears that global trade wars will deepen.
BRENT OIL DROPPED TO 62 DOLLARS
This announcement created downward pressure in the oil markets, causing the price of Brent crude oil to drop by 9.1% within the same week, falling to $65.74, marking the lowest weekly close recorded since August 2021. During the same period, the price of West Texas Intermediate (WTI) crude oil also fell by 9.8% to $62.10. Following retaliatory measures from China against Trump's tariffs, Brent crude oil dropped to $58.22 on April 9, testing its lowest level since February 2021. On the same day, after the U.S. administration announced that it would suspend additional taxes for some countries for 90 days, the price of Brent crude oil rose by 6.7% to $65.47, but ended the week with a 2.2% loss at $64.26. Thus, Brent crude oil closed the week below $65 for the first time in nearly four years. The price of WTI crude oil also ended the week down 1.8% at $60.97.
NEGOTIATIONS WITH IRAN LOWERED PRICES
After Trump's statements regarding the full implementation of sanctions on Iran raised supply concerns, Brent crude oil finished the following week up 4.2% at $66.96. However, news flow indicating that negotiations with Iran were progressing positively and concerns that the ongoing U.S.-China trade dispute would weaken global demand led to a 1.6% decline in Brent crude oil to $65.87 in the week starting April 21. During the same period, WTI crude oil decreased by 1.2% to $62.93. Thus, since April 2, which Trump referred to as "the day of salvation," Brent crude oil has dropped by 10.5%, losing approximately $7.8, while WTI crude oil has decreased by 10.7%, losing about $7.6.
"THE DECLINE IN PRICES IS AN OPPORTUNITY FOR TURKEY"
Fereydoun Barkeshli, President of the Vienna Institute for Energy Studies, stated that the price declines present significant opportunities for net energy-importing countries like Turkey. Barkeshli said, "The decline in oil prices can ease Turkey's energy bill. However, the potential global economic slowdown due to the tariffs imposed by Trump could negatively affect the country's growth expectations." He noted that the trade war initiated by Trump with China heralds a new economic order on a global scale, expressing that Turkey is currently "relatively safe." Barkeshli added, "In the long term, I believe that regional economic collaborations will gain importance. During this process, the establishment of new free trade zones in Eurasia, trends to move away from the dollar, and the development of regional currency mechanisms may come to the forefront."
"THE GLOBAL WEAKENING OF THE DOLLAR IS ALSO A FACTOR REDUCING COSTS"
Homayoun Falakshahi, Senior Oil Expert at the international data analytics company Kpler, explained that the decline in prices is rooted in slowing global growth expectations, stating, "We have lowered our growth forecast for the U.S. from 2% to 0.8%. Therefore, we have revised our 12-month average price forecast for Brent crude oil from $71 per barrel to $66." Falakshahi noted that Turkey has imported an average of 58,000 barrels of crude oil daily since the beginning of the year, stating, "This drop in oil prices reduces the total energy costs for countries like Turkey. Additionally, the global weakening of the dollar is another factor that reduces costs. However, the depreciation of the Turkish lira against the dollar largely eliminates the currency advantage." He pointed out that the trade deficit between the U.S. and Turkey reached approximately $1.5 billion in 2024, an increase of 62.7% compared to the previous year, and noted that Trump's decision to postpone tariffs for 90 days could provide an opportunity for negotiating new trade terms between the two countries.
PRESSURE ON SHALE OIL IS INCREASING
Falakshahi indicated that due to Trump's customs tariffs, global economic growth is slowing, and demand for oil products continues to weaken, stating, "We have revised our demand growth forecast for oil products from 750,000 barrels per day to 500,000 barrels per day. This revision is primarily due to the decline in diesel and naphtha usage in the U.S. and China." He mentioned that keeping oil prices at current levels would pressure shale oil production in the U.S., stating, "The minimum oil price required for new oil wells to become profitable is approximately $65 based on WTI. While a significant decrease in production is not expected in the short term, if prices remain around $60, we could see a daily reduction of 300,000 barrels in production by the end of the year." Falakshahi added that if prices fall to $55, the daily production loss could reach 600,000 barrels, stating, "In the short term, halting drilling activities would be more costly, so it is not feasible. The main impact will be felt in drilling plans 2-3 months later, which will only reflect in production after 5-6 months."