Is there a danger for Azerbaijan, or why is oil becoming cheaper? |
Growth forecasts are down
One of the main factors affecting the price of oil in recent times is the strict monetary policy of the countries. Now the main problem of the global economy is acute inflation cannot be ignored. In many countries of the world inflation records are recorded. In such an environment, the central bank of those countries tightens the monetary policy, increases the accounting rates and activates other similar mechanisms. Thus, economic activity decreases as monetary resources become more expensive. The weakening of the economic activity changes the expectations from the market in a negative direction.
Many economic institutions have already lowered their growth forecasts for large economies. All these factors indicate that the demand for energy resources will weaken in the coming months. This, in turn, leads to a decrease in prices.
addition of OPEC 100 thousand barrels
At present, not one, but several factors affect the decrease in oil prices compared to previous months. One of these factors is OPEC’s decision. At the meeting held in early August, OPEC+ countries in September oil production per day 10approved the increase of 0,000 barrels. It is known that OPEC+ countries 2020in May the coronavirus pandemic made a decision to reduce daily oil production by 9.7 million barrels as the demand for oil decreased due to In the subsequent period, the terms of the contract changed many times. Since August of last year, alliance production has increased by 400,000 barrels per day, and by 432,000 barrels per day in May-June of this year. In July-August, the increase in production reached 648 thousand barrels. Therefore, increasing the supply of oil-producing countries also affected the price formation in the energy markets.
In addition to international organizations and general economic trends, the price of oil is also affected by the steps taken by individual countries. For example, oil-rich countries such as Saudi Arabia and the United Arab Emirates have said that they are able to release additional oil reserves into the market if there is a threat of an energy crisis in the coming winter months. Such disclosures relatively neutralize the price impact of risks associated with energy markets. On the other hand, it should be taken into account that it is considered the world’s largest economy USA is also interested in energy prices not increasing. USA The administration is taking various measures to reduce the price of gasoline on the basis that it is an important part of rising inflation.
In March of this year USA President Joe Biden allowed the sale of 1 million barrels per day of the country’s strategic oil reserves for 6 months and a total of more than 180 million barrels of oil. The White House announced at the end of July that in addition to the strategic oil reserve, in order to make gasoline cheaper in the country 20 will sell million barrels of oil.
The price of oil To Azerbaijan effects
Energy price level economy oil-gas depending on the sector Azerbaijan is also vital for It should be taken into account that 90 percent of the country’s export earnings are formed at the expense of energy carriers. But the present prices Azerbaijan cannot be considered as dangerous for After all, at the end of last year, 2022 state budget when it was approved, the price of one barrel of oil for this year was calculated at 50 dollars. In 2022, the state budget was revised in the middle of the year because the price of oil was higher than expected. In March of this year Azerbaijan the price of oil rose to 135 dollars. 85 per barrel of oil after changes to the state budget in June dollars began to be calculated as
Currently, the price of Azerbaijani oil is close to $100. In other words, the price of oil Azerbaijan did not fall to a dangerous level for the budget. However, this year, although the oil price will drop below 85 dollars by the end of the year To Azerbaijan will not be a problem, because the Chamber of Accounts also stated in its opinion on budget amendments that oil in the first half of the year prices the higher than expected level is enough to cover even the differences that appeared during the higher calculation of a barrel of oil. Therefore, at least until the end of this year, it is not expected that there will be any problems related to the execution of the Azerbaijani budget.
On the other hand, it should be taken into account that during the year 2022, Azerbaijan will naturally gas and increased the income from sales. One noteworthy point here is that in previous years Azerbaijan the main part of energy income is oil, and a smaller part gas consisted of sales. But it can be said that the income from the sale of oil and gas has already been equalized. This is also the factor when the price of oil is falling To Azerbaijan brings an additional advantage. After all Russia–Ukraine Against the backdrop of the war, the remaining energy dependence of Europe on Russia makes natural gas more expensive.
However, it cannot be ignored that the dependence of Azerbaijan’s economy on the energy sector to such a large extent makes energy prices always a risk factor for the country’s economy. In this regard, in order to reduce the impact of falling oil prices on the country’s economy, the dependence on the energy sector must be reduced.