Houthi attacks on ships in the Red Sea threaten the energy market. The Arab world and the Mediterranean are facing a major crisis, along with the Suez Canal, through which 12 percent of global trade passes. The US plans to conduct an operation there. The rise of the crisis here to a global level affects the energy market – the price of oil. This is one of the very important factors for our economy.
On the issue Vugar Bayramov, member of the Economic policy, industry and entrepreneurship committee of the Milli Majlis Publika.azmade a statement to
He noted that the price of oil in the world market has been increasing in recent days:
“Of course, the world market price of oil is influenced by political factors. If tensions arise again in the Middle East as well as in the Red Sea, new increases in the world market price of this oil can be observed. In general, any tension in the Middle East affects the world market price of oil as a whole, and price increases are observed. Therefore, on the one hand, the demand is expected to be optimized in 2024, because in practice, the optimization of demand continues in the world market. On the other hand, political factors directly affect the price of oil. Therefore, if all this happens, the price of oil in the world market will increase. Because as a result, it means that there may be difficulties and obstacles in bringing oil to the market.”
The price of oil and natural gas depends on many factors. One of the most important factors is the geopolitical factor. Since it is geographically close to the Gulf, there is a possibility of spreading to the region and spreading to Iran, especially in the case of the Israel-Hamas conflict.
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The deputy added that the world market price of oil is one of the important factors for Azerbaijan:
“If the price increases, it can lead to more foreign currency entering the country. During the year, if the world market price of oil exceeds the forecast by 10 dollars per barrel, it generally means an income of about two billion manats for the economy of Azerbaijan. But without a doubt, if there is a decrease in the price, it will also lead to a decrease in the volume of currency entering the country. If we look at the current currency, the current market price of oil entering the country makes it possible for stable currency to enter Azerbaijan.”
The Middle East geography accounts for 50 percent of the world’s known oil reserves. About 6.8 million barrels of oil and products enter the Red Sea through the Babul Mandeb Strait per day. The Houthis threaten the United States and its allies. They stop ships carrying not only oil, but also other goods. This increases freight costs.
Ilham Shaban, expert in the field of oil, head of the Oil Research Center said that all these processes affected the price of oil:
“Because the problem in the Red Sea between the Houthis and Western companies in the field of transportation has not yet been resolved. This keeps the markets under tension. Because more than half of the ships, including tankers, have to cover an additional 9,000 km around Africa. As a result, the price of oil has already exceeded 80 dollars. “Before that, the price of Brent oil was 75-76 dollars.”
OPEC+ countries are cutting to boost oil prices. Russia aims to cut 500,000 barrels per day, and Saudi Arabia aims to cut 1 million barrels. If we add to this the possibility that the production of Iran, which is already under pressure, will be further limited if the conflict expands, or that the Strait of Hormuz, which provides 21 million barrels of export per day, will be closed, we can see that there is also a serious risk there. The price increase will have a very negative impact on Turkey, which is almost entirely dependent on foreign oil and gas.
Aysel Shahmar
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