ANKARA — Surging oil prices triggered by the US-Israeli war with Iran are likely to pause Turkey’s rate-cut cycle and potentially derail the country’s efforts to bring down inflation.

The war, which began on Feb. 28, has rattled global energy markets. Iranian attacks on oil and gas facilities in Gulf countries and the effective closure of the Strait of Hormuz, a waterway connecting the Gulf to global markets, pushed crude prices above $120 per barrel on Monday before they retreated on Tuesday to around $90.

The shock comes at a delicate moment for Turkey’s economy. After launching an aggressive tightening campaign in 2023, the central bank raised its benchmark interest rate from 8.5% to 50% between June 2023 and March 2024 in a bid to rein in soaring inflation. This was followed by a gradual easing cycle in December 2024 after annual inflation fell below 50% the previous month. The process was briefly interrupted in April 2025 amid market turmoil following the arrest of Istanbul Mayor Ekrem Imamoglu, a key rival of Turkish President Recep Tayyip Erdogan, in a move critics described as politically motivated. Easing resumed in July 2025, bringing the policy rate down to 37% through consecutive cuts by January 2026.

“I think what's clear is, no rate cuts,” Timothy Ash, senior analyst at BlueBay Asset Management, told Al-Monitor ahead of Thursday’s interest-rate decision.