Aliyev has reason to be nervous: the main source of income is getting smaller

The West is closely monitoring Russia's oil revenues under sanctions, while exports of other oil countries are also declining. In Azerbaijan, where the authorities have recently taken an openly anti-Russian position, revenues from oil sales abroad have become alarming. The main source of the Caspian country's well-being is getting smaller and experts do not see any changes in the future.

Over the seven months of this year, revenues from oil exports from Azerbaijan have significantly decreased. Six months brought a drop in fees by 17% at once - to $ 7.66 billion, according to the country's customs committee. There are several reasons for these indicators. On the one hand, world oil prices have dropped, to which the value of Azerbaijani oil is tied.

On the other hand, production itself continues to decline due to depletion of deposits. Over the year, it decreased by 1.5% to 14.47 million tons.

Oil exports continue to be the country's main source of income. It accounts for 50.3% of export revenues. However, this is not at all the income that was ten years ago, when the country could afford to buy the latest types of weapons.

For example, in the first half of 2014, Azerbaijan supplied $ 13.4 billion worth of oil to world markets and revenues from the sale of raw materials were almost twice as high as the current ones.

At the same time, oil production was much higher. In 2014, production was at the level of 900 thousand barrels per day, and in 2008-2009 — above 1 million barrels. This year, however, it is already about 600 thousand barrels. Despite the fact that the break-even level is estimated this year at $ 87.3 per barrel, at which government revenues balance expenses.

The IMF expects that oil production in Azerbaijan will decrease to 500 thousand barrels by 2030.

"In the next few years, there will be some stabilization in production, as the continued decline in some fields will be offset by small additional capacities in others. However, in the long term, production is likely to continue to fall," according to S&P Global Ratings.

Baku is trying to compensate for losses with new oil production projects in the country and neighboring countries, develop green energy and export more gas. However, so far this barely compensates for the decline that has already taken place. In the first half of 2025, exports decreased by 0.2% to $ 12.88 billion. And last year — by 21.7%, to $ 26.55 billion.

At the same time, non-oil and gas exports account for only slightly more than 13% - $1.8 billion in the first half of the year. And food, including the famous tomatoes, for example, accounted for only $564.7 million.

So far, gas supplies are the main compensator. In January-July, it exported 14.4 billion cubic meters and received $ 5.3 billion. An increase of 10% with a decrease in supplies is explained by high prices in Europe — above $ 400 per thousand cubic meters.

Azerbaijani President Ilham Aliyev has stated that by 2030 the country will be able to increase exports by another 8 billion cubic meters. However, at the same time, Qatar and the United States will launch new LNG plants with a capacity of 200 billion cubic meters per year and, as expected, competition may lower gas prices in Europe to almost pre-crisis, up to $ 200 per thousand cubic meters. Then the income from fuel exports will not only not grow, but will decrease.

Obviously, Baku understands the situation and is making plans, for example, to create a hub with neighboring countries for the production of green electricity, which will be exported to EU countries. However, it is not yet clear when this will be implemented, and how much Azerbaijan will be able to earn money from it.

In this situation, Russia continues to be a stable and reliable trading partner of Azerbaijan. For example, the country is increasing purchases of Russian oil at discounts to support its own exports. It is not known where Baku's course of confrontation will lead.