Türkiye's state energy operator announced on Wednesday it was hiking the natural gas price by 38% for residential use as of Aug. 1, the first price hike in almost two years.
In a written statement, Petroleum Pipeline Corporation (BOTAŞ) also said it was hiking natural gas prices by 33.1% for small to medium-sized industrial customers whose annual natural gas consumption is 300,000 cubic meters or less, and used for other purposes than electricity generation, as of the same date.
The institution cited in the statement that its natural gas wholesale prices are being determined "taking into account market conditions, market price stability, the Energy Market Regulatory Authority's (EPDK) decisions regarding tariffs and changes in purchasing-operating expenses."
Türkiye largely relies on imports to cover its energy needs, with energy accounting for 18.2% of the overall import figures in the country in June or $4.54 billion, according to the data from the Turkish statistical authority.
The energy import bill increased by 5.1% to $5.21 billion in June compared to the same month last year, according to data released by the Turkish Statistical Institute (TurkStat) on Wednesday.
Commenting on the decision, the EPDK said in a statement on Thursday that the average impact on residential gas prices across Türkiye would be reflected as 24.4%.
"As a result, when the unit gas purchase price, system usage fee and taxes, which are the determining factors in the final bill, are calculated, housing prices have increased by an average of 24.4% for Türkiye in general," it said.
"In other words, the price of 1 cubic meter of natural gas has in final increased from an average of TL 7.60 to TL 9.40," it added.
"The sales price of natural gas used by free consumers with an annual consumption of 300,000 cubic meters and below, excluding electricity generation, has increased by an average of 28.7% for Türkiye in general. The price of 1 cubic meter of natural gas for these consumers has in the end increased from an average of TL 11.80 to TL 15.20," the statement said.
However, the latest hike in natural gas for households raises questions about its impact on consumer bills and, thus inflation in the upcoming months. Officials and the central bank already signaled they anticipate a temporary uptick in monthly readings in July.
The central bank in the summary of its latest monetary policy meeting (MPC) said that leading indicators suggest monthly inflation will rise temporarily in July "due to adjustments in administered prices and taxes as well as supply-side factors in unprocessed food prices."
Natural gas prices in Europe rose to 36.37 euros ($39.20) on Thursday as of 10 a.m. GMT due to concerns that rapidly rising geopolitical tensions in the Middle East could affect global gas supply.
The gas price per megawatt-hour for September futures contracts on the TTF, the Netherlands-based virtual natural gas trading venue with the most depth in Europe, closed on Wednesday at 35.78 euros, while rising during the day due to the tensions between Israel and Iran.
Oil prices also rose on Thursday, extending gains from the previous session, after the killing of a Hamas leader in Iran raised the threat of a wider Middle East conflict and concern over its impact on oil.
Global benchmark Brent crude futures rose 78 cents, or 1%, to $81.62 a barrel by 8 a.m. GMT, while U.S. West Texas Intermediate crude futures gained 79 cents, also 1%, to $78.70 a barrel.
The annual inflation rate in Türkiye slowed from 75.45% in May to 71.6% in June, in what is expected to be a sustained fall in the upcoming period due to tight conditions.
The statistical authority is due to announce July inflation data on Monday at 7 a.m. GMT (10 a.m. local time).