Events and processes observed around the Strait of Hormuz affect the price of oil in the world market. Currently, we are observing volatility in the oil market. Prices mostly record increases, and in some cases show decreases. However, the lack of full confidence among investors regarding the use of the Strait of Hormuz is one of the main factors affecting the market.
Vugar Bayramov, a member of the Economic Policy, Industry and Entrepreneurship Committee of the Milli Majlis, stated these views in his statement to Modern.az, commenting on the impact of tensions around the Strait of Hormuz on Azerbaijan, as well as on general economic indicators.
According to the deputy, no serious reductions have been observed in the market yet, and such an expectation has not yet been formed:
“Hesitations regarding the Strait of Hormuz remain, and this naturally affects the oil market. One of the main risks is the volatility in oil prices. We are currently observing that the price of oil is fluctuating. In the event that the Strait of Hormuz remains closed, sharper increases in oil prices may occur.
Thus, approximately 20 percent of the world's oil and 25 percent of the oil transported by sea are transported through this strait. This is a sufficiently serious indicator and one of the factors directly affecting the market. Therefore, in the event of a partial or complete closure of the strait, increases in the world market price of oil may be observed again, and partial effects are inevitable.”
He also emphasized that the current situation shows that volatility in the world market price of oil continues:
“In particular, uncertainty further strengthens this fluctuation. The variability in oil prices is directly related to the hesitations regarding the Strait of Hormuz. Forecasts also depend on scenarios related to the use of this strait. If the Strait of Hormuz is partially or completely closed, or if its use opportunities are limited, this will be observed with increases in the world market price of oil.”
V. Bayramov also added that Azerbaijan is more interested in stable prices in the oil market:
“Along with this, high prices mean more foreign currency entering the country, which leads to an increase in revenues from oil sales. However, since sharp price increases are observed with sharp decreases in the next stage in some cases, a stable price balance is considered more appropriate from the point of view of Azerbaijan's economic interests,” the deputy noted.
For information, a few days ago, the Strait of Hormuz was partially opened within the framework of a ceasefire, and merchant ships were allowed to pass. However, the next day, the Islamic Revolutionary Guard Corps of Iran announced that it had closed the strait again.
