By Dr. Pshtiwan Faraj

Turkey’s expired Iranian gas contract reveals a shifting balance of power as Ankara gains energy options while Tehran increasingly needs Turkish market access.

Turkey’s 25-year natural gas agreement with Iran expired on July 29, but the more consequential development is what has not happened since: Iranian gas has continued to flow, while Ankara and Tehran have not publicly negotiated a new long-term agreement. At first glance, this looks like a technical problem created by the expiry of an old contract. Strategically, however, it reveals a much larger transformation in the Turkish-Iranian relationship. Turkey no longer needs Iranian gas in the way it once did, while Iran increasingly needs Turkey as a reliable export market. The result is an unusual bargaining asymmetry in which Ankara can afford to wait while Tehran has stronger incentives to preserve the relationship.

The existing agreement, signed in 1996 and operational since 2001, provided for up to approximately 9.6 billion cubic meters of Iranian gas annually through the Tabriz-Ankara pipeline. Actual deliveries have generally remained below that ceiling, but Iranian gas remains significant to Turkey, accounting for roughly 13 percent of Turkish gas imports. More importantly, Turkish purchases were rising sharply before the contract expired: Turkey imported approximately 4.536 bcm from Iran during the first half of 2026, an increase of 34 percent from the same period a year earlier. The fact that flows continued after July 29 therefore matters, but it should not automatically be interpreted as evidence that Ankara and Tehran have concluded a new agreement.

The legal basis for the continuing flows remains opaque. Turkish sector sources have suggested that the war prevented the two governments from negotiating a new contract before the deadline and that existing flows could continue temporarily under force-majeure arrangements. Other possibilities include residual contractual provisions or mechanisms relating to volumes not previously taken under the original agreement. There is not enough public evidence to conclude that the current deliveries specifically constitute “make-up gas,” however. The more defensible interpretation is that the physical relationship has continued even though the political and commercial relationship has entered an interim phase.

That distinction is important because it explains why the absence of renewal negotiations may be deliberate rather than a sign of an imminent rupture. Ankara has little reason to rush into a new long-term commitment while the regional security environment remains unstable and Washington is intensifying pressure on Tehran. A long-term gas agreement is no longer simply a matter of price and volume. It requires payment mechanisms, banking channels, insurance, sanctions compliance and confidence that the transaction will remain commercially viable. With the United States expanding its campaign against Iran and threatening greater pressure on countries that continue economic relations with Tehran, Turkey has an obvious incentive to preserve flexibility rather than lock itself into a new agreement.

The strategic calculation is further strengthened by Turkey’s changing energy position. Ankara has spent years reducing its dependence on any individual supplier by expanding LNG capacity, maintaining pipeline relationships with Russia and Azerbaijan, and developing infrastructure designed to make Turkey a regional gas hub. The country is now pursuing an even more ambitious strategy in which Iraqi and Gulf energy could move north through Turkey toward European markets. As I argued in “Türkiye Unveils Ambitious Energy Corridor to Transport Iraq and Gulf Oil, Gas to Europe”, this strategy is not simply about transit infrastructure; it is an attempt to convert Turkey’s geography into strategic leverage.

This diversification changes the meaning of Iranian gas for Ankara. Iranian supplies remain valuable because pipeline gas can be commercially attractive and provides another source of supply, but they are increasingly one option among several rather than a strategic necessity. That gives Turkey an incentive to maintain the relationship without becoming dependent on it. Ankara can continue taking Iranian gas when the economics are favorable while simultaneously expanding Russian, Azerbaijani, LNG, Iraqi and potentially Gulf alternatives. Turkey’s strategy is therefore probably not to abandon Iranian gas, but to make Iranian gas unnecessary.

The distinction between dependence and optionality is central to understanding the current negotiations. A country that has no alternative supplier must negotiate from vulnerability. A country with multiple sources can wait, compare prices and demand better terms. Turkey is increasingly in the second category. The more diversified its energy portfolio becomes, the less leverage Iran can derive from controlling a portion of Turkish pipeline supply. This is also why Turkey’s broader energy relationship with Iraq and the Kurdistan Region matters to the Iranian gas question. Ankara is building a network in which energy routes from different producers converge on Turkish infrastructure rather than relying overwhelmingly on any single geopolitical partner.

The same logic is visible in the evolving Iraq-Turkey energy relationship. Turkey’s efforts to preserve and expand the Iraq-Turkey Pipeline, explore new routes from southern Iraq and potentially connect Gulf gas to its network suggest that Ankara is constructing alternatives before it actually needs them. My analysis of “The Pipeline Cliff: How Turkey’s Expiring Oil Deal Could Trigger Iraq’s Next Economic and Political Crisis” examined precisely this problem: pipelines increasingly function as instruments of statecraft rather than merely transportation infrastructure.

This matters for Iran because Turkey’s alternatives are developing at precisely the moment when Tehran’s own export options are becoming more constrained. Iran faces intensified sanctions, disruption to its energy trade and increasing pressure on the financial mechanisms through which it conducts international commerce. Turkey therefore occupies an unusually important position in Iran’s energy strategy. Reuters estimates bilateral trade between the two countries at roughly $5–6 billion annually, with energy accounting for a major portion of the relationship. Turkey remains one of Iran’s most important economic partners at a time when Washington is attempting to isolate Tehran.

That creates a fundamental asymmetry. Turkey can reduce Iranian gas purchases if the political or financial costs become too high. Iran cannot easily replace the Turkish market with an equivalent alternative. Pipeline gas requires infrastructure, proximity and a sufficiently large consumer. Turkey provides all three. Losing part of the Turkish market would therefore deprive Tehran not only of export revenue but also of one of its most strategically important commercial relationships with a NATO member.

This is where the possibility of better Iranian commercial terms becomes significant. There is currently no reliable public evidence that Iran has formally offered Turkey a new post-expiry discount. It would nevertheless be rational for Tehran to consider concessions designed to preserve market access. Those concessions could take the form of lower effective prices, more flexible volumes, reduced take-or-pay obligations, more favorable payment arrangements or other contractual adjustments. The important point is that Iran does not necessarily need to announce a “discount” for the economics of the relationship to shift in Turkey’s favor.

The pressure on Iran becomes even more pronounced when the wider regional energy environment is considered. The conflict surrounding the Strait of Hormuz has demonstrated how quickly energy security can become a geopolitical weapon. My analysis in “The Battle for Hormuz: How Iran Could Redraw the Global Energy LNG Map” argued that Hormuz is becoming more than a maritime chokepoint: it is increasingly an instrument through which Tehran can challenge the regional energy order. For Turkey, the logical response is not greater dependence on a single regional supplier but greater diversification across pipelines, LNG and alternative corridors.

The U.S. sanctions campaign adds another layer to the calculation. Washington’s latest measures are intended to intensify economic isolation of Iran and increase the costs for countries and companies maintaining significant economic relationships with Tehran. Turkey has not indicated that it intends to abandon Iranian commerce, and an immediate termination of gas imports would impose real costs on Ankara. But the risk is no longer limited to the price of Iranian gas. Turkish banks, payment channels, insurers and companies involved in the trade could potentially face increasing exposure to U.S. sanctions pressure.

That creates a powerful incentive for Ankara to avoid signing a new long-term agreement before it understands the scope of Washington’s enforcement strategy. Turkey can continue receiving Iranian gas under an interim arrangement, observe how the sanctions regime develops and then decide whether the commercial benefits justify the financial and geopolitical risks. The absence of negotiations may therefore itself be a negotiating strategy. Ankara does not need to reject Iran; it simply needs to avoid committing itself while the strategic environment is changing.

Turkey’s experience with other energy relationships reinforces this approach. The country has repeatedly used infrastructure, transit routes and market access to increase its bargaining power with producers and consumers alike. Its disputes with Baghdad and Erbil over oil exports have demonstrated how energy corridors can become instruments of political leverage. The recent French court ruling concerning Turkey’s role in Iraqi Kurdish oil exports, examined in “Turkey’s $1.47 Billion Oil Defeat Reignites Iraq-Kurdistan Energy Battle”, illustrates the legal and geopolitical complexity surrounding Ankara’s position as an energy transit state.

The Kurdish dimension is also increasingly relevant. The Kurdistan Region sits between Turkey and Iran and possesses energy resources that could become part of a wider regional connectivity strategy. At the same time, Iranian pressure on Kurdish opposition groups operating from Iraqi territory has made the region an increasingly sensitive component of Tehran’s security calculations. My analysis, “Iran’s Cross-Border Campaign Escalates: What the Latest IRGC Strikes Mean for Iraqi Kurdistan,” examined how Tehran’s military pressure on Iranian Kurdish groups is becoming part of a broader strategy to prevent Iraqi Kurdistan from becoming a platform for Iranian opposition activity.

That security dimension intersects with Turkey’s emerging energy strategy in ways that should not be underestimated. Ankara wants stable borders, predictable energy corridors and a reduction in the ability of armed Kurdish organizations to disrupt regional connectivity. Tehran wants to prevent Kurdish opposition forces from exploiting Iraqi territory. Baghdad wants to preserve sovereignty over cross-border security. These interests do not make Turkey and Iran strategic partners, but they create areas of overlapping interest even as their energy relationship becomes more transactional.

The broader transformation of Kurdish geopolitics reinforces this point. In “The Kurds as the Connecting Link in Washington’s New Regional Strategy”, I argued that Kurdish actors are increasingly becoming part of a regional architecture built around energy, trade, infrastructure and connectivity rather than military alliances alone. The Kurdistan Region’s position between Iraq, Iran and Turkey means that changes in energy geography inevitably have security consequences. The Iranian gas question is therefore not an isolated commercial dispute; it sits within a much larger contest over who controls the routes connecting the Middle East’s energy producers to its major markets.

Iran’s vulnerability is not limited to its gas relationship with Turkey. Tehran is also increasingly confronted with the problem of maintaining energy exports to Iraq while navigating sanctions and payment restrictions. Iraq’s dependence on Iranian gas has already forced Baghdad to search for mechanisms that can preserve energy imports without exposing its financial system to U.S. sanctions. My analysis of “Iraq and US Strike Deal to Settle Iran Gas Debt Through Goods Instead of Cash” explored how sanctions are transforming even routine energy payments into instruments of geopolitical bargaining.

The Turkish case could become more consequential because Ankara has more alternatives than Baghdad. Iraq remains deeply dependent on Iranian energy for electricity and gas, whereas Turkey has spent years building redundancy into its energy system. This means Washington’s sanctions pressure is likely to have very different effects on the two countries. Baghdad may struggle to replace Iranian supplies quickly; Ankara can potentially reduce them over time.

This is ultimately why the expiry of the July 29 contract should not be understood as a binary question of whether Turkey will continue buying Iranian gas. It is better understood as a question of what kind of relationship Turkey is willing to maintain with Iran. Ankara can preserve Iranian gas as a marginal, flexible or price-sensitive component of its energy mix without giving Tehran the structural leverage that a long-term dependency would provide.

The most consequential variable now may therefore be price. If Iran wants to retain Turkey as a major customer, it may eventually need to offer terms that reflect Turkey’s stronger negotiating position. If Tehran refuses, Ankara has alternatives. If Washington intensifies sanctions, Turkey can reduce its exposure. If Iranian gas remains significantly cheaper than competing supplies, Ankara can continue importing it while keeping its options open. This is not strategic alignment; it is transactional interdependence under conditions of asymmetric leverage.

The irony is that the deterioration of Iran’s geopolitical position may make Turkey more important to Tehran while simultaneously making Iranian gas less important to Turkey. That is the opposite of the traditional assumption that energy dependence binds the two countries together on relatively equal terms. Iran may still possess the pipeline and the gas, but Turkey increasingly possesses the alternatives.

For Ankara, the optimal strategy is therefore neither to abandon Iranian gas nor to renew the old relationship automatically. It is to preserve access while maximizing optionality. Turkey can take Iranian gas when it is cheap, use LNG when it needs flexibility, rely on Azerbaijan and Russia for pipeline diversity, and develop Iraqi and Gulf corridors that further reduce the strategic value of any individual supplier.

For Tehran, the calculation is harder. Iran needs export markets, foreign currency and commercial relationships that remain resilient under sanctions. Turkey provides all three. But retaining that market may require concessions that Iran would once have considered unnecessary. The longer Ankara waits, the more those concessions could grow.

The July 29 expiry is therefore best understood not as the end of the Turkey-Iran gas relationship but as the beginning of a new bargaining phase. The physical gas may continue to flow, but the strategic relationship behind it has changed. Turkey no longer has to choose between Iranian gas and energy security; it can use Iranian gas while building the capacity to live without it. That is the central geopolitical shift.

Ankara’s strategy is probably not to abruptly abandon Iranian gas, but to gradually make Iranian gas unnecessary. Tehran, meanwhile, has stronger reasons to keep the Turkish market open. The result is a relationship in which Turkey can wait, Iran has greater incentives to compromise, and Washington’s sanctions campaign could determine just how far that imbalance ultimately goes.

About the Author

Dr. Pshtiwan Faraj is the founder and author of Kurdish Policy Analysis, specializing in Kurdish affairs, Iraq, Iran, Turkey, energy geopolitics, regional security, and the strategic transformation of the Middle East.

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