Beyond Climate Policy: Türkiye's Energy Transition as a Resilience and Industrial Strategy in Times of Geopolitical Turmoil

Beyond Climate Policy

The ongoing conflict in the Middle East starkly illustrates how vulnerable fossil fuel-based energy systems are to geopolitical events, accelerating the need for the energy transition toward renewable energy sources and electrification. The U.S.– Israel–Iran war has led to the temporary closure of the Strait of Hormuz, a critical chokepoint for global fossil energy supplies. Fossil energy markets reacted immediately, with oil and natural gas prices increasing sharply within days. The price of Brent crude rose to more than USD 118 per barrel, approximately 60% above the price prior to the outbreak of the war on February 28. European gas prices at the Title Transfer Facility (TTF) trading hub reacted even more strongly, doubling to 63 EUR/MWh. 

Executive Director of the International Energy Agency Fatih Birol warns that “the global energy crisis caused by the war in Iran is equivalent to the combined force of the twin oil shocks of the 1970s and the fallout from Russia’s invasion of Ukraine.”1 At the macroeconomic level, energy price shocks contribute significantly to rising inflation and prompt monetary tightening. As a negative supply shock, higher energy prices increase inflation while simultaneously weighing on economic activity.