Most of Turkey's 270 million barrels of oil reserves are located in the Hakkari Basin (which is also where most of Turkey's oil production occurs), with additional deposits found in Thrace in the northwest. There also may be significant reserves under the Aegean Sea, however this has not been confirmed as a result of the ongoing territorial dispute with Greece. Turkish Petroleum Company (TPAO) has increased its exploration activities in the Black Sea, which according to the company could hold 10 billion barrels of oil. A number of foreign companies are involved in the exploration of the Black Sea in joint ventures with TPAO, including ExxonMobil and Chevron. ExxonMobil is planning to begin drilling its first exploration well in the Turkish sector of the Black Sea in the first half of 2011. Chevron, which has announced a substantial increase in its exploration budget for 2011, will serve as operator for any future wells that are drilled in Block 3921 (third from the right in the map below).

Concurrent with its economic expansion, Turkey's oil consumption grew for most of the last decade, peaking at 690 thousand bbl/d in 2007, far exceeding the domestic supply. Since then Turkey's consumption has decreased somewhat as a result of the global (and Turkish) economic downturn. In 2009, Turkey's consumption totaled 580 thousand bbl/d, the lowest level since 1994.

In 2009, Turkey imported about 90 % of its total consumption. The majority of Turkey's oil imports originate in Russia, which became the country's top supplier in 2007, surpassing Iran for the first time. Additional oil imports originated in Saudi Arabia, Libya, Iraq, and Syria.

TPAO is the main exploration and production entity in Turkey, and directly competes with the private sector in these activities. However, the state-owned firm has preferential rights and any foreign involvement in upstream activities is limited to joint ventures with TPAO. Overall, TPAO produced about 70 % of the total oil output in Turkey in 2009.

Turkey is playing an increasingly important role in the transit of oil supplies from Russia, the Caspian region, and the Middle East to Europe, with the Turkish government deriving significant revenues from the transit fees. Growing volumes of Russian and Caspian oil are being sent by tanker via the Bosporus Straits to Western markets. Approximately 2.9 million bbl/d flowed through Bosporus in 2009, 2.5 million bbl/d of which was crude oil. Oil shipments through the Turkish Straits decreased from over 3.4 million bbl/d at its peak in 2004 to 2.6 million bbl/d in 2006 as Russia shifted crude oil exports toward the Baltic ports. Traffic through the Straits has increased again as Azerbaijan and Kazakhstan crude production and exports rose.

Additionally, a terminal on Turkey's Mediterranean coast at Ceyhan allows the country to export oil from northern Iraq via a pipeline from Kirkuk and from Azerbaijan via the Baku-Tbilisi-Ceyhan pipeline. The Kirkuk-Ceyhan pipeline is Turkey's largest oil pipeline (by capacity), and serves as a transport pipeline of Iraqi oil. It is approximately 600 miles long and has a capacity of 1.65 million bbl/d. However, frequent attacks on the pipeline's Iraq section regularly result in operation disruptions.

The Baku-Tbilisi-Ceyhan Pipeline (BTC) is Turkey's longest pipeline, and runs approximately 1,100 miles is capable of carrying 1.2 million bbl/d of oil. The pipeline transports Azeri light crude via Georgia to Turkey's Mediterranean coast for further export. The pipeline initially came into service in June 2006.

To ease increasing oil traffic through the Bosporus Straits, a number of Bosporus bypass options are under consideration in Bulgaria, Romania, Ukraine, and Turkey itself. The Baku-Tbilisi-Ceyhan Pipeline, which bypasses the Bosporus Straits chokepoint, is the first of numerous planned or proposed Bosporus bypass pipelines to be constructed. In addition, Turkish government approved the construction plans for the proposed Samsun-Ceyhan pipeline that, according to some estimates would reduce the Bosporus Straits oil tanker traffic by up to 50 %. The Samsun-Ceyhan bypass would transport oil from Turkey's Black Sea port of Samsun to Ceyhan on the Mediterranean coast. The project includes the construction of a 350-mile oil pipeline, a new terminal for receiving oil at Samsun and a terminal for exporting the oil and a storage plant at Ceyhan. The oil pipeline will have a maximum initial transportation capacity of 1 million bbl/d, which can eventually be increased to 1.5 million bbl/d.

The port of Ceyhan has become an important outlet for both Caspian oil exports as well as Iraqi oil shipments from Kirkuk. Turkey is seeking to build up Ceyhan as a regional energy hub, with private investors receiving approval to build several refineries at the oil terminal, adding revenue beyond transit fees

Turkey has six refineries with a combined processing capacity of 714,275 barrels per day. Turkish Petroleum Refineries Company (Tupras) is Turkey's dominant refining firm, operating about 85 % of the total refining capacity. Turkey's refining sector is in the process of being privatized, with the formerly state-owned Tupras's majority of shares (51 %) currently owned by a consortium of companies including Koc Holding, Avgaz, and Shell. The remaining 49 %%of shares are publicly traded.

Refineries in Turkey are also undergoing modernization, with the aim to improve Turkey's refined products that would meet EU environmental and fuel-quality standards. In addition, new refinery construction is planned for Ceyhan, which is the terminus of two existing pipelines (Kirkuk-Ceyhan and BTC), as well as the ongoing Samsun-Ceyhan project. There are at least three proposals for new refineries in Ceyhan. Additionally, the state-run Indian Oil Corporation recently expressed interest in participating in a project to build a new $5-billion refinery near Ceyhan.