"The price of oil has fallen by approximately 35 dollars compared to its previous peak".
Economist Ilham Shaban stated these words in a statement to Modern.az.
He noted that high volatility is currently observed in global energy markets due to the Iran-US confrontation. The price of Brent crude oil has fallen to approximately 84 dollars per barrel:
"This sharp drop in prices occurred after the statement made by French Finance Minister Roland Lescure following the meeting of G7 (USA, Great Britain, Germany, France, Italy, Canada, and Japan) finance ministers. These countries are discussing the possibility of using strategic oil reserves in response to increasing tensions in the Middle East”.
According to Ilham Shaban, a decision on this matter should be made by the G7 today.
“The step is primarily political in nature. This is because the seven developed nations of the world are observing the negative impacts of the current situation on the global economy. Furthermore, the practical implementation of the decision should be carried out by the International Energy Agency (IEA)”.
The economist emphasized that the French minister's statement specifically refers to strategic oil reserves under the control of the International Energy Agency. According to him, the agency's 32 member countries collectively hold strategic reserves of approximately 1.2 billion barrels, and these reserves can be released to the market in emergency situations:
"In 1974, a decision was made for major oil-importing countries to create inviolable reserves. The goal was for these reserves to act as a kind of security mechanism for the global economy in the event of any force majeure situation in the world energy market"
The expert added that since then, the agency has resorted to such measures only 5 times:
"The last such step was taken in March 2022, during a period of sharp increases in oil and gas prices following the start of the Russia-Ukraine war. At that time, member countries of the International Energy Agency decided to release 2 million barrels of oil daily to the market, with the US additionally releasing 1 million barrels. As a result, the price of oil fell from 130 dollars to 95 dollars in a short period".
At the same time, it is claimed that Donald Trump's optimistic views, based on the assumption that the Iran war would end, also had an impact on the decrease in oil prices.
Economist Natig Jafarli, however, stated that the price issue is relative:
"When the war started, a barrel of oil was 68 dollars. Therefore, oil valued at 80-90 dollars is not considered cheap. Even if the war ends, the status of price increase will remain. This is economically beneficial for Azerbaijan" .
