BAKU, Azerbaijan, April 16. The rising geopolitical tensions in the Middle East have recently become one of the main topics of discussion in the global energy market. In particular, the escalation of the U.S.-Iran conflict and the risks arising around the Strait of Hormuz have led to serious price increases in the oil market. As a result of this process, Brent oil has exceeded $100 at times, and even the possibility of an increase to the range of $150-200 is being discussed in analytical scenarios.
As a result, Azeri Light oil, the main export product for Azerbaijan, also grew in price. Currently, the price of Azerbaijani oil has exceeded $118. In the 2026 state budget of Azerbaijan, the average price of a barrel of oil is taken at the level of $65.
Thus, a difference is formed between market prices and the base price envisaged in the budget, but precisely at this point, the main issue arises: this difference doesn't affect the budget to the same extent.
Economists on the issue believe that there is no direct and immediate connection between short-term price jumps and real state budget revenues because budget revenues are formed not only from the selling price of oil, but also from production volumes, existing contract terms, operating costs, and tax mechanisms. That's why, even if the price grows, this increase isn't reflected in the fiscal system in the same proportion.
The views of economist Eldeniz Amirov also confirm this approach. He noted that in the long term, this effect of oil price increases is weakened by inflation and increased costs. That is, the price increase, which seems large at first glance, is actually balanced by various factors within the economic system.
"Oil price increases create different economic effects in the short and long term. In the long term, they accelerate inflation in import-dependent economies, which negatively affects the purchasing power of the population," he said.
Amirov emphasized that price increases also affect the inflation process. According to him, this impact is not limited to Azerbaijan.
"Every 10% growth in oil prices in the world has a negative impact of 0.5 percentage points on inflation indicators," he explained.
Short-term growth, long-term uncertain impact
This approach is also reflected in specific figures. According to preliminary estimates, oil revenues increased by about 20% in the first quarter of 2026, which means an additional 360 million manat ($211.7 million) in total. However, against the background of a sharper hike in prices, this indicator shows that the fiscal impact remains limited.
On the other hand, Azerbaijan's fiscal policy is also built taking into account such volatility. The base price taken into account in the budget reflects a cautious approach, and long-term planning is not carried out for short-term price increases.
Consequently, a significant part of the additional revenues is not directly directed to the budget. These funds are mainly accumulated in the Oil Fund and stored as reserves. Thus, the impact of price increases on the budget is further limited.
Economist Ilham Shaban also emphasized that although budget revenues increase against the backdrop of price increases, this increase is not in the same proportion as prices because the decline in production, company costs, and other factors determines the final result.
According to him, the main beneficiaries are transport and logistics companies, as well as insurance and credit institutions.
International assessments also show a similar picture: although the increase in energy prices creates a short-term opportunity for exporting countries, this process is accompanied by high volatility and inflation risks.
Consequently, although the current price increase creates certain additional opportunities, sustainability remains the main condition for its transformation into a long-term fiscal effect.
Thus, it's considered a more realistic approach to assess the current situation as a limited and temporary effect rather than a large-scale income increase.
Domestic stability against the backdrop of global price increases
Rising oil prices in global markets usually also affect domestic fuel prices. In many countries, this increase is felt directly and has a wide-ranging impact, starting from production costs and ending with general inflation.
However, a different model is applied in Azerbaijan. The state keeps the prices of basic energy products stable through regulatory mechanisms.
This approach, on the one hand, protects social welfare, and on the other hand, limits the impact of global price increases on the domestic economy.
The same principle is observed in the gas market. Even if global prices increase, maintaining domestic tariffs stable prevents a sharp increase in energy costs.
Thus, Azerbaijan's approach is more focused on maintaining stability in volatile energy markets than on maximizing short-term profits. In this context, the main priority is to manage risks, maintain budget sustainability, and avoid disruption of social balance.
Maintaining stable fuel and gas prices in the domestic market is also a practical tool of this strategy. This mechanism, on the one hand, prevents a sharp increase in population spending, and on the other hand, limits additional pressures in the business environment and keeps overall inflation risks under control.