‘Oil Price Increase Costs Turkey $2.5 Billion’

Yesterday’s announcement by the Organization of Petroleum Exporting Countries (OPEC) that it would bring its backup capacity online if needed did little to help, as oil remained over US$44 a barrel

Experts pointing out unexpected increases may still appear despite OPEC’s intervention said that the prices are not expected to recede from the current point. We should not discount the possibility that oil could surpass $50 [a barrel].

While the whole world wonders whether a new oil crisis is on the horizon, Turkey is especially concerned about how the new developments will affect the country’s economy. Economists suggest that the increase in oil prices could drive up inflation and the exchange rate.

Speaker of the Council of Turkish Exporters Oguz Satici agrees that the increase should not be reflected in industry. "Otherwise, exports will shrink" said Satici and hinted that the government is supposed to be self-sacrificed on Private Consumption Tax applied on petroleum products.

Meanwhile, Petkim Managing Director Kenan Yavuz says on the subject: "There are some who are ruthless and willing to profit from the energy. The process will go on like this until 2007. The increase in demand is also a factor. Turkey is faced with a $2-2.5 billion burden because of the increasing costs. Inflationary pressure is inevitable. If there are those manipulating the situation, then we cannot specifically say what comes tomorrow. The high petroleum prices will affect the products as well."

A Union leader for petroleum products Muhsin Alkan suggested that oil could climb as high as $50, maybe even $60, a barrel. "We hope that it will decrease. The position of the government towards the result plays a much more important role from the aspect of the Turkish people."