Recent geopolitical tensions in the world are not without impact on global economic processes. Amidst the escalating confrontation along the US-Israel-Iran axis, fluctuations are observed in energy markets, and this process is primarily reflected in oil prices.
The price of oil in the world market also plays a significant role for the Azerbaijani economy. The increase in oil revenues directly affects the volume of foreign currency entering the country, state revenues, and overall financial stability.
It is interesting to consider whether any risks await the Azerbaijani manat amidst the increasing geopolitical tension and the observed changes in oil prices.
In a statement to Modern.az regarding the topic, **Vugar Bayramov**, a member of the Milli Majlis Committee on Economic Policy, Industry, and Entrepreneurship, noted that the rise in oil prices in the world market leads to an increase in the volume of foreign currency entering Azerbaijan.
“The rise in oil prices in the world market increases the volume of foreign currency entering Azerbaijan. Consequently, the more foreign currency enters a country, the more advantageous it is considered, both in terms of meeting currency demand and protecting the national currency's exchange rate. Therefore, if oil prices in the world market are high, it will lead to more foreign currency entering the country.”
According to the deputy, this will lead to an increase in dollar supply:
“An increase in dollar supply is one of the important criteria for protecting the manat's exchange rate. Nevertheless, even if the volume of foreign currency entering the country increases, we do not expect the manat to strengthen against the dollar. This is because the Central Bank's current policy is aimed at maintaining the current exchange rate.
Azerbaijan has not transitioned to a floating exchange rate regime; a regulated or fixed exchange rate regime is applied in the country. For this reason, in the coming periods, the manat's exchange rate will directly depend on the Central Bank's position.”
V. Bayramov also added that the decisions of the Central Bank play a decisive role in determining the national currency's exchange rate:
“If the price of oil in the world market is high, the Central Bank's capabilities to maintain the national currency's current exchange rate are further expanded. This is because the price of oil in the world market is one of the main factors directly affecting the manat's exchange rate.”
For information, the price of 1 barrel of Azerbaijani oil of "Azeri Light" brand decreased by 12.69 US dollars.
In the world market, the price of 1 barrel of Azerbaijani oil of "Azeri Light" brand decreased by 12.69 US dollars or 12.32 %, amounting to 90.34 US dollars.
In Azerbaijan's state budget for this year, the average price of one barrel of oil was calculated at 65 US dollars.
It should be recalled that the lowest price for "Azeri Light" oil was recorded on April 21, 2020 (15.81 US dollars), and the maximum price in July 2008 (149.66 US dollars).
