Turkish lira drops as Saudi drone attacks spark oil price surge

Turkey’s lira fell on Monday, leading other emerging market currencies lower, after an attack on crude oil facilities in Saudi Arabia sparked a surge in oil prices.

The lira fell 0.6 percent to 5.72 per dollar at 9:10 a.m. local time in Istanbul. The Hungarian forint declined 0.2 percent to 299.61 per dollar and the Polish zloty lost 0.1 percent to 3.90.

Drone strikes on Saudi Arabian oil facilities on Saturday disrupted about half of the country’s oil supply, or 5 percent of the daily global supply. Oil prices had been in a slump, helping energy-importing countries such as Turkey slow inflation and encourage economic growth.

The price of U.S. crude jumped more than 15 percent earlier on Monday but later eased to trade down 9.6 percent at $60.09 per barrel. Turkey imports nearly all the oil it consumes and is a neighbour of Iran, which the United States accused of conducting the attacks.

The increase in oil prices is a big deal and “will like haunt us for months, if not weeks,” Tom Kloza, chief oil analyst at Oil Price Information Service, told CNN. The price of gasoline is set to creep up this autumn, rather than drop steadily, as it has done historically, he said.

Turkey’s central bank cut interest rates by 325 basis points to 16.5 percent last week, citing a downtrend in inflation, which now stands at 15 percent. The consumer price inflation rate has fallen from a 15-year high of 25.2 percent in October, when it had surged due to a currency crisis.