Baku (TDI): The price of Azerbaijan’s benchmark crude oil, Azeri Light (CIF), has decreased by $1.13 or 1.71%, settling at $65.13 per barrel.
This decline puts the current price below the Azerbaijani government’s 2025 state budget projection of $70 per barrel, prompting discussions on potential fiscal adjustments.
Concurrently, Brent Crude Futures traded at $63.28 per barrel, for June delivery, indicating a broader softness in global oil markets. Additionally, the price of Azeri Light on a Free on Board (FOB) basis at Türkiye’s Ceyhan port fell by $1.12 or 1.74%, amounting to $63.40 per barrel.
The recent downturn in oil prices is attributed to multiple interrelated factors:
- Increased OPEC+ Production: In April 2025, OPEC+ announced a significant increase in oil production, adding 411,000 barrels per day for May. This decision, which tripled earlier projections, has contributed to an oversupplied market and exerted downward pressure on prices.
- Geopolitical Tensions and Economic Uncertainty: The global economic landscape is currently facing uncertainties due to shifting U.S. tariff policies under President Donald Trump’s administration. These policies have raised concerns regarding global energy demand and significantly influenced market dynamics.
- Reduced Middle East Tensions: The recent decrease in conflicts in the Middle East, especially between Israel and Iran, has reduced worries about oil supply disruptions. This has helped lower oil prices.
- Global Demand Forecast Adjustments: OPEC has lowered its global oil demand growth projections for 2025, citing diminished expectations for the Middle East and other regions. This adjustment signifies a cautious outlook on energy markets due to economic and geopolitical challenges.
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The Azerbaijani government had set the average oil price in its 2025 state budget at $70 per barrel. The current price dipping below this benchmark may necessitate adjustments in fiscal planning and budget allocations. However, officials remain cautiously optimistic, monitoring market trends and exploring measures to mitigate potential revenue shortfalls.
Azeri Light has experienced significant price volatility over the years. The lowest recorded price was $15.81 per barrel on April 21, 2020, during the height of the COVID-19 pandemic. Conversely, the all-time high was $149.66 per barrel in July 2008, amid a global commodities boom.
The current decline in Azerbaijan’s oil prices underscores the volatility of global energy markets influenced by production decisions, geopolitical developments, and economic policies.
Areeba Kanwal is a contributor at The Diplomatic Insight and has passion for International Relations and diplomacy.
