Overview
At a White House meeting on September 25, US President Trump urged Turkish President Erdogan to stop buying oil and gas from Russia, as part of Trump’s insistence that such purchases by NATO member states fund Russia’s war effort. President Trump dangled the possibility, without making commitments, that he was amenable to lifting US sanctions on Turkey and restoring Turkey’s access to the advanced F-35 fighter jet program.
Turkey is receptive to the request, not just because Ankara wants to acquire F-35s, but also because it offers a pathway to improve the US-Turkey bilateral relationship that has been deeply troubled over the last decade, while advancing Turkey’s long-held ambition to become a regional energy hub. Improved bilateral relations promise to bring new investment opportunities, although significant uncertainty regarding Turkey’s energy supplies and strategy may delay progress.
Resolving Disputes in the Bilateral Relationship
US-Turkish relations have been difficult over the past decade as the two long-time allies and NATO partners disagreed over regional and strategic policies. Angered by the lack of progress in its efforts to integrate into Europe as a member of the European Union, Ankara turned eastward. Turkey sought to play a larger regional role, adopting policies that put Ankara and the US on opposite sides of a growing set of issues. Many, but not all, of these disputes have been resolved with the passage of time and political changes in the region.
Syrian Civil War: The US and Turkey clashed over the role of the Syrian Democratic Forces (SDF), a US-backed Kurdish group with ties to Turkish political organizations that Ankara considers terrorists, in fighting against the Islamic State and the Assad regime. The end of the civil war has enabled Washington and Ankara to align on supporting the new Syrian leadership under Ahmed al-Sharaa, with the SDF slated to integrate into the regular Syrian armed forces.
Gülenist Movement: President Erdogan accused Washington of aiding and abetting the Gülenist Movement, which Ankara accused of attempting a coup in 2016 against the Erdogan government. Fethullah Gülen died in the US in October 2024 at the age of 83, rendering moot Turkey’s extradition request.
Iran Sanctions Evasion: The US accused Turkish state-owned bank, Halkbank, of helping Iran circumvent US sanctions by secretly transferring $20 billion of Iranian oil revenue between 2012 and 2016. A settlement is currently in the works, with negotiations over setting a manageable fine progressing.
Russia: Asserting national sovereignty in defense matters, Ankara proceeded with the purchase of the Russian S-400 missile defense system in 2019, dismissing US and NATO warnings that the acquisition was incompatible with Ankara’s NATO obligations. The US interpreted Ankara’s policy as a political shift toward Russia, not just an issue of interoperability and intelligence threat. In response, the US imposed sanctions on Turkey under the Countering America’s Adversaries Through Sanctions Act (CAATSA) and removed Turkey from the F-35 program.
Turkey as a Regional Energy Hub
Turkey is the second-largest importer of seaborne Russian Urals crude after India, according to LSEG data. Turkey is also a significant refining hub for Russian oil products, which are re-exported to Europe. The growth of Russian imports has been buoyed by discounted pricing and Ankara’s desire to become a regional energy hub, connecting eastern producers to western consumers and the Eastern Mediterranean basin. However, Turkey’s development as a regional energy hub is increasingly being constrained by new restrictions placed on Western buyers for purchasing Russian energy and derivative products as the EU closes loopholes, pushes forward import ban dates and further lowers the oil price cap. Furthermore, Ankara has become more dependent upon Russian imports, which runs counter to its long-running policy of developing energy independence for economic security.
Before the White House meeting, Turkey had already begun taking steps to diversify energy imports. Turkey has signed a 20-year LNG supply agreement with Mercuria, an independent energy and commodity group headquartered in Geneva, for the import of 4 billion cubic meters of natural gas-equivalent LNG annually starting in 2026, sourced from the US and North Africa. Turkey has signed a second agreement with Australian Woodside Energy for deliveries of about 5.8 billion cubic meters of LNG equivalent over nine years starting in 2030, sourced from its Louisiana LNG project. The signing of these agreements reflects a shift in Turkey’s energy policy, from relying on shorter-term deals (LNG spot market imports), to a commitment towards buying US LNG.
Europe is thirsty for non-Russian hydrocarbons, which creates an opportunity for Turkey to upgrade its LNG infrastructure and become a regional hub serving Southeast Europe and the Balkans. Ankara has already invested heavily in floating storage regasification units at Dörtyol and Saros and expanded underground storage facilities at Silivri and Tuz Gölü. These increase Turkey’s capacity to receive LNG and to arbitrage flows for the re-export market.
Increased LNG shipments will help reduce Ankara’s domestic reliance on Russian gas through the TurkStream and Blue Stream pipelines. Turkey also signed an agreement with Azerbaijan in June to boost gas production, with Ankara taking a 30% stake in developing the Shafag-Asiman field, which has an estimated reserve of 500 billion cubic meters of gas and 65 million tons of condensate.
Replacing Russian oil would be more challenging for Ankara because of economics and politics. While Moscow is saying that Turkey is a sovereign state and will make trade decisions that are advantageous to Turkey, the subtext is that Moscow can impose costs on Ankara if it makes “unfriendly” decisions. Moscow has aptly demonstrated its willingness to weaponize energy policy.
Turkey does have access to alternative sources, but not at the same volume and price point. On September 27, Iraq resumed crude oil exports from Kurdistan to Turkey for the first time since March 2023. The initial agreement is for 180,000 to 190,000 barrels per day (bpd) to flow through the Kirkuk-Ceyhan pipeline, with a goal to increase the flow to 230,000 bpd. In 2024, Turkey imported an average of 300,000 to 400,000 bpd from Russia, at a discount ranging between $5 to $20 per barrel.
It is unclear if Turkey will continue to import Iranian oil now that UN sanctions have snapped back, presenting political and economic risks for Ankara. President Trump has been doubling down on the “maximum pressure” campaign on Iran, and Washington has already been pressing Ankara to end oil imports from Iran. Swapping Russian imports for more Iranian crude would not be well received in Washington.
Resetting the US Relationship
Improved US-Turkish bilateral relations promise to open new business and investment opportunities. Both presidents are signaling their willingness for increased cooperation and deal-making. Washington wants to sell more US LNG and increase bilateral trade. As a show of good faith prior to President Erdogan’s visit to the White House, Ankara terminated the retaliatory tariffs imposed in 2018 on US imports after Washington hit Turkey with tariffs on steel and aluminum.
The White House meeting was reportedly a success, with a positive joint press conference showcasing mutual praise and shared concerns. The two leaders reaffirmed a goal of $100 billion in annual two-way trade (in 2024, it was about $30 billion) and signed a MoU on Strategic Civil Nuclear Cooperation (with the potential for the US to supply small modular reactor technology to Turkey). After the meeting, Turkish Airlines announced a major deal to purchase up to 225 jets from Boeing. Lifting US sanctions and a deal on the purchase of F-16 and F-35 fighter jets are under discussion. To keep the momentum going, Ankara will have to navigate the political risks of leaning away from Moscow toward Washington and actually deliver on commitments.
