Turkey's 25 year gas contract with Iran just expired, and Washington is making sure it stays that way

A 25 year gas supply agreement between Turkey and Iran expired on 29 July, and it did so at the worst possible moment for a quiet renewal. The contract, signed in 1996 with deliveries starting in 2001, had allowed Iran to pipe up to 9.6 billion cubic metres of gas into Turkey each year through the Tabriz to Ankara line. With the deadline arriving in the middle of a regional war and an intensifying US sanctions campaign, the two sides never got to the table to negotiate what comes next, and existing flows are reportedly continuing only under temporary force majeure arrangements rather than a new binding deal.

How much Turkey actually leaned on Iranian gas

Turkey's reliance on that pipeline had been climbing right up until the contract lapsed. Imports in the first half of 2026 reached 4.536 billion cubic metres, a 34 percent jump from the same period the year before, and June alone brought in 883 million cubic metres. Iran's share of Turkey's total gas imports rose to 18.6 percent, up from 13 percent the year prior, driven partly by the fact that Iranian gas has consistently ranked among the cheapest options available to Ankara. Cheap supply is not the same as secure supply, though, and the gap between those two things is exactly what Washington's renewed pressure campaign is now testing.

• The 25 year Turkey to Iran gas contract, signed in 1996, expired on 29 July 2026.
• Pipeline capacity under the deal reached up to 9.6 billion cubic metres a year.
• H1 2026 imports hit 4.536 billion cubic metres, up 34 percent year on year.
• Iran's share of Turkey's total gas imports rose to 18.6 percent from 13 percent.
• Turkey's total annual gas demand runs between 50 and 60 billion cubic metres.
• Turkey and Iran did more than 5 billion dollars in bilateral trade in 2024.

Washington raises the stakes

The contract's expiry landed just as the US Treasury escalated its campaign against Iran's remaining trade relationships. Treasury Secretary Scott Bessent has framed the moment in blunt terms, warning that every country with economic ties to Tehran has been given a defined timeline to shut those activities down, and that Washington will act unilaterally through Treasury authorities against those that do not comply. Analysts have flagged China, India, Turkey, Iraq and the UAE as the countries most exposed to that pressure given the depth of their existing trade with Iran. Turkey has publicly held its position since 2018 that it will not formally join US sanctions, but the practical difficulty of keeping energy and trade flowing through a country under this level of scrutiny has already been dragging on bilateral commerce.

“Every country has a defined timeline to shut down activities we have identified. If they do not take action, we will do so unilaterally through Treasury authorities.”

The diversification Turkey already had underway

What makes this squeeze more survivable for Ankara than it would have been a decade ago is the diversification it has spent years building. Russian gas continues to flow through the Blue Stream and TurkStream pipelines, Azerbaijani supply arrives via the Southern Gas Corridor, and Turkey has been steadily expanding its LNG import and storage capacity alongside long term supply agreements to back it up. Domestic production from the Black Sea has also been climbing. Turkey's energy minister, Alparslan Bayraktar, has acknowledged that Iranian pipeline gas may still be needed for supply security in the near term, which is a tacit admission that the diversification, while real, has not yet fully closed the gap. Iran, for its part, is negotiating from a weaker position than it held when the original contract was signed three decades ago, facing aging fields, limited access to outside investment, war related infrastructure disruption, and now the added uncertainty of how any future payments would even move through the banking system.

Our reading

Three things stand out. First, the timing here is not accidental, an expiring 25 year contract colliding with an escalating US sanctions deadline gives Washington far more leverage over the outcome than it would have had if the contract still ran for another decade. Second, the fact that Turkey's Iranian gas share had actually been rising into 2026, on the back of price rather than necessity, means the loss is a real cost to Ankara's energy bill even if it is not an existential one, since the alternative supply exists but at a higher price point. Third, Iran's negotiating position has eroded far more than Turkey's has, and a renewal on anything like the old terms looks unlikely while sanctions pressure is this pointed. We read the contract's quiet expiry less as a one off event and more as a marker of how much harder it has become for Tehran to hold onto its remaining trade relationships, one expiring deal at a time.