The observed increase and fluctuations in oil prices in the world market have once again brought to the agenda the possible effects on the Azerbaijani economy. These changes are of particular importance for countries that depend on energy revenues, both in terms of the stability of the national currency and budget indicators. In the current situation, the level of impact on the manat exchange rate and the extent to which the applied policy balances these processes attract attention. At the same time, the impact of the increase in oil revenues on economic growth, the development of the non-oil sector, and long-term sustainability also becomes a subject of discussion. It is interesting, what are the opportunities and risks created by the changes in the global energy market for the Azerbaijani economy against the background of the current geopolitical tension and formal ceasefire?
Commenting on the impact of existing processes on the country's economy to Modern.az, Vugar Bayramov, a member of the Economic Policy, Industry and Entrepreneurship Committee of the Milli Majlis, noted that the increase in oil prices leads to more currency entering the country, which directly affects currency supply.
"In general, the exchange rate of the national currency depends on both the volume of currency entering the country and the demand in the currency market. We observe that the currency entering Azerbaijan increases during periods of high energy product prices, which is considered important in terms of maintaining balance in the currency market. In this regard, high oil prices mean more currency for oil countries and, as a result, create additional opportunities for protecting the national currency.
However, after the recent US-Iran ceasefire agreement, the dollar has weakened somewhat against basket currencies in world markets. In particular, a decrease in the dollar's exchange rate against the euro has been recorded in recent days. But despite all this, strengthening the manat is not a priority at the moment. The main goal of the Central Bank is to maintain the current exchange rate of the manat."
The deputy also emphasized that the price of oil in the world market directly affects not only currency inflows, but also state budget revenues:
"Thus, approximately 43 percent of state budget revenues are formed at the expense of the oil sector. In the state budget for 2026, the price of one barrel of oil is set at 65 dollars. In March, the price of oil in the world market was one of the highest indicators of recent times, and this is mainly due to geopolitical tensions in the region. However, one-month price changes are not considered a basis for annual evaluation. The general trend is that the price of oil in the world market remains high, and a sharp decrease is not predicted in the near future against the background of existing global, as well as regional risks.
Although a certain decrease in prices was observed after the ceasefire, an increase was recorded again in recent days. Thus, the price of "Brent" crude oil increased by more than 3 percent. This shows that full stability has not yet been formed in the oil market."
V.Bayramov also added that high oil prices ultimately allow more funds to enter the state budget:
"The main advantage is the increase in currency revenues. Along with this, this situation also creates certain risks. On the one hand, price increases in global markets affect the increase in prices of imported products. On the other hand, after high prices, the volatility in the market increases and the risk of a sharp decrease after a certain period increases. We observed this situation in 2014-2015.
In this regard, stable oil prices are more appropriate for Azerbaijan. Because sharp fluctuations create additional risks in terms of economic stability. Increased volatility against the background of high prices also strengthens the probability of a decrease in prices in the next stage."
The deputy also stated that the increase in oil revenues expands financial opportunities for the development of the non-oil sector and creates conditions for more active support of this area:
"In general, the exchange rate of the manat depends on the volume of currency entering the country. Along with this, since Azerbaijan has not fully switched to a floating exchange rate regime, the exchange rate of the manat will continue to depend directly on the position of the Central Bank in the next stage," he concluded.
