S&P Warns Türkiye Among Most Vulnerable to Oil Price Shock

Türkiye and several Central and Eastern European (CEE) economies could face significant pressure in the event of a sharp rise in oil prices, according to a new report by S&P Global Ratings. While the baseline outlook suggests manageable risks, a high-price scenario could expose structural vulnerabilities, particularly in energy-import-dependent economies like Türkiye.

Baseline Scenario: Risks Seen as Manageable

S&P Global Ratings’ latest assessment outlines a relatively stable baseline outlook for energy markets:

• Brent crude expected to average $80 per barrel in 2026
• Declining to around $65 per barrel in 2027

Under this scenario, the agency expects:

• Limited impact on sovereign credit ratings in the CEE region
• Manageable macroeconomic pressure across most economies

Karen Vartapetov, Credit Analyst at S&P Global Ratings, noted that the muted impact reflects both cautious pre-war assumptions and expectations that European gas prices will remain below the 2022 peak levels.

Stress Scenario: Türkiye Among the Most Exposed

The report highlights a more severe “stress scenario,” where:

• Brent crude rises to $130 in 2026
• Remains elevated at $100 in 2027

In such a scenario:

• Türkiye and Hungary emerge as the most vulnerable economies
• High energy import dependence and energy intensity amplify risks

S&P emphasizes that the extent of the damage would depend on:

• Fiscal buffers
• Monetary policy response
• External financing conditions

For Türkiye, the key vulnerabilities include:

• Persistent current account sensitivity to energy prices
• Inflation pass-through from imported energy
• Pressure on exchange rates and financial conditions

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Diverging Impact Across Europe

The report underscores that not all CEE economies face equal risks.

More resilient economies:

• Romania: Benefits from domestic energy production capacity
• Poland: Relies more heavily on coal in its energy mix

These structural factors help cushion the macroeconomic impact of rising oil prices.

However, even in relatively resilient countries:

• Weak growth
• Limited fiscal space

could still complicate policy responses.

Gas Prices: A Critical Wild Card

Beyond oil, S&P warns that natural gas prices could pose an even greater risk.

If:

• TTF Northwest European gas prices surge toward 2022 highs,

then:

• Economic pressure across CEE economies would intensify significantly
• Credit rating downgrade risks could become more widespread

Conclusion: Energy Dependency Remains the Key Risk

S&P’s analysis highlights a clear divide:

• Economies with diversified energy sources and domestic production are better positioned
• Countries like Türkiye, with high import dependence, remain structurally exposed

As geopolitical tensions continue to shape energy markets, Türkiye’s economic outlook will remain closely tied to:

• Oil and gas price dynamics
• Policy response effectiveness
• External financing conditions

ANALYSIS: February employment data very weak underneath the headline