Baku: Amid global geopolitical tensions and rising prices in energy markets, the possibility of increasing import inflation in Azerbaijan and its impact on monetary policy are in focus, the Central Bank of Azerbaijan (CBA) said in response to an inquiry, APA-Economics reports.
According to Azeri-Press News Agency, developments in the global environment and their impact on energy market prices are constantly being monitored. Recent events in the Middle East are affecting the narrowing of supply in the global energy market, which is accompanied by rising prices for energy products. At the same time, the CBA noted that under the current circumstances, it is quite difficult to make accurate forecasts regarding oil and gas prices: ‘A sharp increase in prices or their return to previous levels will largely depend on how the current conflict develops.’
The Central Bank also emphasized that the long-term dynamics of energy prices are mainly determined by fundamental factors. These factors include the global economic growth rate, decisions adopted within the OPEC+ framework, and the introduction of less energy-intensive technologies. It was added that the updated macroeconomic forecasts will be presented to the public in May as planned. When preparing the new forecasts, recent developments in the global economy will also be taken into account.
Note that tensions in the Middle East have sharply increased after the United States and Israel carried out strikes on Iran on February 28 this year. Following this, Iran’s increased military presence around the Strait of Hormuz and periodic restrictions on maritime transportation have created serious concerns in global energy markets.
The increase in risks in the Strait of Hormuz, through which 20% of seaborne oil passes, has strengthened the possibility of disruptions in global energy supply. Amid geopolitical tensions, the price of Brent crude oil per barrel rose to $100 in a short period, and on some days even reached $120. Analysts believe that if the conflict prolongs, the price of oil may rise to $140 per barrel, and in the most pessimistic scenarios, it is not ruled out that it could reach $200.
It was noted that if energy prices remain high for a long period, it may increase global inflationary pressures and also heighten the risk of a mild recession in some economies.