The ongoing war in Iran and the region is also drawing attention to its economic impact, particularly its effect on oil prices. The prolongation of the war is continuously increasing the prices of oil and gas.
In particular, the threat emerging in the Strait of Hormuz significantly impacts the oil market. The Strait of Hormuz is one of the most strategic points in the global energy system. Approximately 20 percent (20-21 million barrels) of the world's daily exported oil passes through this strait. For this reason, geopolitical-military tension in the region or the closure of this route immediately results in a significant price increase in the global energy market. The fact that the market price of a barrel of oil has already exceeded 89 dollars, and futures prices for May have surpassed 116 dollars, is proof of this. At the same time, an increase in natural gas prices is also observed.
For Azerbaijan, as an oil-exporting country to the world market, this issue is of particular interest. This is because our country exports its oil to the world market via the Baku–Tbilisi–Ceyhan and other routes, and our exports are not dependent on the Strait of Hormuz. This means that when a price increase occurs in the global market, Azerbaijan can obtain the opportunity to sell at a higher price without experiencing problems in physical export routes.
Looking at the figures: in 2025, Azerbaijan exported approximately 23 million tons (approximately 169 million barrels) of oil and condensate. In the state budget, the base price of oil was set at 65 dollars per barrel. The fact that the price in the global market is significantly higher than this level in the medium and long term will considerably increase our country's export revenues and budget capabilities.
According to a simple calculation:
1) An average price of 100 dollars per barrel of oil could increase our export revenues by approximately 5–6 billion dollars.
2) A price of 120 dollars could increase our export revenues by approximately 8–9 billion dollars.
3) A price reaching 150 dollars could increase our export revenues by approximately 12–14 billion dollars.
These calculations are for a scenario where prices remain at these levels for the long term, not just short term. In short-term surges, the increase in revenue will be negligible.
Such a situation could strengthen Azerbaijan's trade balance, foreign exchange reserves, and budget revenues. According to calculations presented by the Ministry of Finance in the 2025 budget package, a 10-dollar increase in the price of a barrel of oil could increase state budget revenues by approximately 400 million manats. Currently, when calculating state budget revenues, the price of oil is set at 65 dollars. This means that oil prices at 100 and 120 dollars could increase state budget revenues by 1.4 billion and 2.2 billion manats, respectively.
However, it is important to consider that such price increases occur against a backdrop of regional or global tension. This, in turn, increases risks such as inflation, decreased demand, and economic uncertainty in the global economy.
It should be noted that nearly 50% of Azerbaijan's imports come from countries affected by regional conflict. It is undeniable that the ongoing events will strengthen inflation and increase import prices.
In short, the war around Iran could create significant opportunities for Azerbaijan in terms of oil revenues in the short and medium term. However, this is not a natural economic advantage; rather, it is revenue arising from the risk of regional war. Therefore, in such cases, the most rational approach is to direct the additional revenues obtained towards increasing strategic reserves, diversifying the economy, and developing the non-oil sector. This creates long-term stability by reducing dependence on oil price volatility (even a sharp drop after some time). This strategy also aligns with our country's policy of developing the non-oil sector.
In other words, although the war around Iran creates significant fluctuations in the global energy market, this situation could turn into a fiscal advantage for Azerbaijan for a certain period.
Tahir Mirkişili
Member of the Milli Majlis
