Changes in oil prices to play into hands of Azerbaijan, expert says
By Aynur Karimova
The historic nuclear deal reached between Iran and six world powers is believed to revive the country's crude oil exports, which have diminished under the Western sanctions.
Economic expert Ogtay Hagverdiyev told local media that oil prices, which currently stand at approximately $57 in the world market, will vary from $50 to $70 per barrel over the next two years.
"In winter, oil prices will likely rise to $70, since the need will increase. Of course, this will play into the hands of Azerbaijan. Our red and dangerous line is $40 per barrel of oil. If prices decrease below this line, it will be difficult for Azerbaijan. We have a financial cushion to cope with it," he said.
Hagverdiyev also said if Iran increases oil exports, it will not threaten Azerbaijan's economy.
Years of sanctions and economic stagnation in Iran have hampered investment and development in the country’s oil fields. Therefore, resuming oil production will not be easy.
"If the sanctions are lifted, Iran will be able to increase oil production only in at least 3-4 years, and only by one million barrels. This is stressed by foreign analysts as well. Therefore, there is no threat for Azerbaijan in the coming years. Only the U.S. and Saudi Arabia influence oil prices. They have their weight and influence in world oil markets. Our country occupies less than one percent in this market," he said.
Despite the fact that results show that oil prices have decreased in the first half of the year, Azerbaijan has gone beyond its target budget figures by 1.2 percent and the GDP by more than 5 percent.
It is expected that Iran will produce 300,000-500,000 barrels of additional oil per day within 6-12 months after the deal is finalized and the EU and the U.S. start peeling back sanctions.
However, this outlook is significantly lower than the official data stated by Iranian officials. They say that the country could export more than 1 million additional barrels of oil a day in the absence of sanctions, nearly doubling the country’s exports from 1.2 million barrels today to 2.3 million barrels.
Earlier Mohsen Kamsari, the director of International Relations department of the Iranian national NIOC oil company, said that the country intends to restore its share in the European market at 42-43 percent, as it was before the imposition of sanctions. Thus, Iran is ready to immediately begin the supply of crude oil to Europe as soon as Western sanctions are lifted.
Iran's next step to export gas via TANAP
There have been suggestions recently that Iran will implement a program to resume its gas exports to Europe.
"There were suggestions that this will be carried out through Turkey ‘through the existing pipeline.’ However, one small detail should be considered – the pipeline, if TANAP is in mind, is still under construction. The process will continue at least until the end of the decade.
The total capacity of the pipeline is 20 billion cubic meters of gas, some 16 billion of which is Azerbaijani gas. Of course, the capacity can be increased to 34 billion cubic meters, but there were no concrete negotiations in this regard. There were some verbal conversations and nothing more. The controlling stake is in Azerbaijan. Neither the EU nor Iran has formulated their proposals for the possible export of Iranian gas through TANAP. Perhaps it will be done in next step," expert Ilgar Velizade wrote on his Facebook page.
Velizade believes that Iran's deal reached with world powers allows the country to be actively involved in the processes of regional and world politics, in particular to develop a full-fledged economic and trade cooperation with European partners and neighbors, Azerbaijan in particular. International sanctions will be gradually lifted from Iran, making trade and economic cooperation between Azerbaijan and Iran possible.
Also, as part of the Caspian cooperation, projects such as the North-South international transport corridor will be implemented quickly and significant progress will be made in the format of trade and economic cooperation within the framework of the so-called Iran-Azerbaijan format, he added.
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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova
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