US President Donald Trump announced that oil prices are expected to decrease in the world market after the operation against Iran is completed. According to him, as a result of this process, oil prices may even fall below the level they were at before the US began its strikes on Iran.
In addition, a change was observed in the price of Azerbaijani oil in the world market. Yesterday, a barrel of "Azeri Light" brand oil increased by 6.56 US dollars or 8.2 percent, reaching 86.16 dollars. However, according to today's statistics, the price of the same brand of oil decreased by 3.87 US dollars or 4.7 percent, falling to 82.29 US dollars.
Against the backdrop of the current situation, the possible effects of changes in oil prices on Azerbaijan's economy are also being discussed. Particularly noteworthy are what economic consequences a price increase could bring for the country, as well as whether uncertainties in the global energy market create certain risks for Azerbaijan.
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 recent increase in oil prices in the world market is directly related to the war in Iran. According to him, military tension has affected the global oil market, and an increase in prices is observed against this backdrop.
“Currently, a barrel of Brent crude oil is offered at a price higher than 80 dollars. This is considered one of the highest indicators in recent months.
Along with the war, difficulties arising from oil transportation through straits, including hesitations in this direction, have also created uncertainty in the market and directly affected prices.”
The deputy also emphasized that after the war ends and especially after cargo transportation through the Strait of Hormuz is fully restored, a certain stabilization of oil prices is expected:
“However, it should be noted that even before the tensions with Iran began, oil prices in the world market were not low. Although prices were not very high, average market prices over the past two months have been higher than previously forecasted.
For example, in January, the average market price for Brent crude oil was recorded higher than forecast indicators. This indicates that although the recent war affected the price increase, prices in the market were already relatively high from the outset.”
V. Bayramov also brought to attention that how processes will develop in the Middle East and whether any difficulties arise in oil transportation will directly affect future prices.
“Furthermore, the world market price of oil is influenced not only by geopolitical factors but also by the level of global demand. The main reasons for the current price increases are related to political factors, the war involving Iran, and tensions arising in the region.”
Meanwhile, Ilham Shaban, Chairman of the Oil Research Center, commented on US leader Donald Trump's statement regarding oil as follows:
“According to US President Donald Trump's statement, the price of oil could be 85 dollars in the near future, or even rise to 90 dollars. This directly depends on the course of the war.
The main question is how long the war will last and whether energy facilities will be subjected to more attacks than they have been so far. Also, when oil shipments through the Strait of Hormuz will be restored is an important factor. This process could be restored in 2-3 days, or it could take 10-15 days. Currently, it is not possible to accurately predict this, as the course of the war can change at any moment.”
Ilham Shaban stated that one of the main reasons for this is that Iranian oil is under sanctions:
“If the sale of Iranian oil is somehow facilitated, an additional volume of oil will enter the market. This will lead to an increase in supply. As for prices falling in the absence of a market shortage, this is considered a natural process.
The current prices above 80 dollars are mainly the result of the risk factor created by the war. These risks are reflected in prices. After the risks are eliminated, the market usually returns to its previous course, and prices may even form at a lower level.”
He also added that prices depend on the balance of supply and demand:
“If there is no shortage in the market, a decrease in oil prices is inevitable. This principle is the same not only for oil and gas but for all products – when supply is high in the market, prices fall.”
