Azerbaijani experts talk market impact following rise of RON-95 fuel price

By Trend

The price of RON-95 gasoline in Azerbaijan rose by 40 gapiks (24 cents) - up to two manat ($1.18) per liter on July 13, Trend reports.

The growth was triggered by global increase in fuel prices, since Azerbaijan doesn't produce RON-95, but imports it. Until July 13, the price remained stable, although oil prices on the world market have risen by about 65 percent since September 2021.

Since March 2022, the cost of this brand of gasoline has increased by 77.8 percent in Russia, by 34.8 percent in Georgia, by 10 percent in Kazakhstan, and by 51.7 percent in Türkiye.

Azerbaijani economic expert Ilgar Valizade, commenting on the issue, said that it was practically impossible to avoid the increase in the cost of RON-95 Premium gasoline in Azerbaijan under the current conditions.

“The point is about the rapid growth of world oil prices. For several years, the cost of a barrel of oil has exceeded $100. Besides, the oil production and refining costs, and high-octane fuel production costs are growing. This fuel isn’t produced in Azerbaijan and its significant part is delivered to our country from Europe in the conditions of disrupted supply chains," Valizade noted.

He reminded that the Baku Oil Refinery named after Heydar Aliyev is expected to start production of high-octane fuels in the near future.

"The commissioning of these capacities can stabilize the situation in our country. However, under current conditions, an increase in prices for premium gasoline was inevitable," he said.

At the same time, according to Valizade, transportation of the main goods in Azerbaijan is carried out by trucks which run on diesel fuel or RON-92 gasoline.

"The growth in the price of RON-95 Premium won’t affect the costs of manufacturers and retail chains, since the prices for those brands of fuel which are used in cargo and passenger transportation haven’t changed," he said.

Besides, the expert stressed that it’s planned to launch the production of all fuel types in Azerbaijan, which will allow the country to meet its needs in this area at the expense of its own resources, achieve self-sufficiency.

"Despite the alarming global trends, in Azerbaijan we look at this situation with great optimism, since we have our own raw materials and capacities for processing oil and gas to produce all types of fuel,” Valizade noted. “After commissioning the capacities for the production of this type of fuel at the Baku Oil Refinery, the situation will stabilize, and the Azerbaijani consumer will be largely protected from the shocks.”

Another economic expert, professor, head of department at Azerbaijan’s Odlar Yurdu University Elshad Mammadov noted that in this context, Azerbaijan has to once again think about how to effectively implement anti-inflationary policy in the country and how to deal with the actual import of inflation.

“It’s necessary to develop a policy of import substitution. In this context, Azerbaijan has very impressive opportunities, especially in such areas as oil, oil production and processing.”

“According to various expert estimates, about 80 percent of the oil produced in Azerbaijan is exported as crude, which creates great opportunities for oil refining within the country. The increase in the price of premium gasoline won’t entail an increase in the price of RON-92 gasoline. The state's ability to maintain the price of RON-92 gasoline is very impressive," Mammadov said.