The Ministry of Finance has announced the preliminary indicators of next year's state budget. The forecast takes the price of one barrel of oil branded "Azeri Light" in the 2026 state budget at 65 US dollars. This is 5 dollars lower compared to the price set in the 2025 state budget. Is lowering the oil price in the budget the right decision? If yes, should the price be set at 65 dollars, or should it be lower?
Speaking to Medianews.az on the subject, economist Natiq Jafarli first recalled that in the 2025 budget, one barrel of oil was taken at 70 dollars: “Before that decision was made, higher prices had been proposed, but in the end, 70 dollars was accepted. The Cabinet of Ministers takes higher prices because lower prices cause problems in calculating budget revenues, sharply reducing budget income. When revenues fall, it becomes necessary to reduce budget expenditures, or the budget deficit increases. There is also very negative attitude in the Azerbaijani government towards increasing the deficit. That is, the government does not allow the budget deficit to rise too much. This is actually correct. A sharp increase in the budget deficit is not a very good situation for states. The high oil price considered in Azerbaijan’s state budget is precisely related to this. Now, 65 dollars is proposed. I think this is a very optimistic approach.”
N. Jafarli noted that if the figure was not 65 dollars but for example 60 dollars, reductions in budget revenues would be observed and there would be a need to tighten budget expenditures: “Therefore, for now, setting it at 65 dollars can be explained with this logic. I think next year, we may see oil being sold at lower prices in the world markets. If geopolitical tensions do not rise and if we do not witness very large and violent wars in the Middle East, oil prices could fall sharply. Because production is increasing. Both production is increasing in the US, and oil-exporting countries that are part of the OPEC+ coalition have decided to increase production further next year. Against the backdrop of increased production, prices of 55-60 dollars are expected. But as I said, if geopolitical tensions and wars increase significantly, then oil prices could even rise to 80, 85, or 90 dollars.”
Nailə Qasımova,
Medianews.az
