Five Trends in Iran-Turkey Trade, Energy Ties

International sanctions and regional tensions over Syria could still upset the uptick in Iran-Turkey economic relations, but the trend is positive.

al-monitor Hundreds of trucks bringing in diesel from Iran line up on a road as they head to the eastern province of Van in Turkey, Nov. 30, 2005. Photo by REUTERS/Fatih Saribas.

Thèmes

turkish energy imports, turkish energy dependency, turkish economy, turkish economic growth, turkish-iranian relations, oil and gas, iranian regionalism, iranian oil, competition between turkey and iran

oct. 31, 2013

The future of Iran-Turkey relations has been a topic of interest, especially as Ankara and Tehran stand on the opposite sides of the Syrian crisis. There has been some speculation about a cooling off in the relations and a collapse in the vibrant trade and energy ties between the two neighbors. However, as will be shown below, the outlook for trade and energy ties remains positive.

On Oct. 17, Turkish Energy Minister Taner Yildiz was quoted as saying that Turkey would continue to import oil and gas from Iran despite Western pressure to reduce its imports. Turkey is importing 10 billion cubic meters (bcm) of gas per year from Iran but would buy more if it were available, Yildiz said in a briefing during the World Energy Congress in South Korea. The country would also take at least the same 5 million tons (100,000 barrels per day) of Iranian crude in 2014 that it is taking this year, as any more cuts in the volumes from Iran would “threaten” its economy, Yildiz said. Evidently, energy cooperation, especially Turkish gas imports from Iran, is an important cornerstone in bilateral relations; however, one needs to appreciate the nature of Iran-Turkey ties to assess how sustainable these relations are in the current challenging environment.

The two countries have historically enjoyed a good relationship facilitated by cultural and religious affinities. Evidently, due to their regional and international ambitions, Iran and Turkey have also had their share of regional competition, but compared to other bilateral relations in the Middle East, this relationship has been a robust one. In addition to an important degree of economic and trade interdependency, in the foreign policy strategies of both countries, there is a special attention to the other party as an Islamic and strategic neighbor.

In the past decade, the core of the relationship has been based on strengthening trade and energy relations. In fact, Iran-Turkey trade reached $21.3 billion in 2012 (up from $1.2 billion in 2002; see graph below), which makes Turkey one of the most significant trading partners of Iran. According to the Turkish Ministry of Economy, Iran was Turkey’s third-largest export market in 2012 with an export volume of $9.9 billion. In the same year, Iran was Turkey’s sixth-largest supplier of imported goods, with a value of $11.4 billion. Total trade volume was up 33% from 2011. The top five Turkish import categories for 2012 were coal and raw petroleum materials; natural gas, plastics in primary forms; and, metals other than iron and organic chemicals. 

If this trend continues, the two sides will achieve their set goal of a $30 billion trade volume by 2015 — a goal that was committed to in an agreement signed during an official trip to Iran in February 2011 by Turkish President Abdullah Gul. 

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