Goldman Sachs Raises Its Oil Forecast: What It Means For Azerbaijan's Economy

Goldman Sachs's $5 per barrel increase in its oil price forecast may at first glance seem like a normal piece of news about the global energy market. However, for the Azerbaijani economy, which is significantly dependent on oil revenues, this change has broader macroeconomic implications. It is especially noteworthy that this decision coincides with a period when Azerbaijan's foreign exchange reserves have reached record levels, deposits in the banking sector have grown, and the country's current account surplus is maintained.

Goldman Sachs expects Brent oil prices to average $85 in December 2026 and $80 in 2027. WTI forecasts are $80 and $75, respectively. The bank's forecast is based on the assumption that disruptions in shipping in the Middle East will continue until next year. However, the $5 increase in the forecast also indicates that a large and long-term oil shortage is not expected in the market.

The most important indicator for Azerbaijan is the price of oil actually exported by the country. On September 8, the price of Azeri Light reached $107.31. This is $42.31, or about 65 percent, higher than the $65 oil price used in the preparation of Azerbaijan's 2026 state budget.

This difference is also reflected in the main financial indicators of the Azerbaijani economy. According to official data from the Central Bank, the institution's foreign exchange reserves reached $15,301.3 million as of August 31. This is an increase of $3.8 billion, or 33 percent, since the beginning of the year. In August alone, the Central Bank bought about $1.5 billion from the foreign exchange market. The Central Bank attributes this situation to the current account surplus and de-dollarization in the financial sector. It should also be noted that this is the highest indicator since the devaluation in 2015.

Here, the importance of the oil price becomes apparent. When oil prices are high, the volume of dollars entering the country from exports increases. This allows the current account to remain in surplus, the supply of dollars in the foreign exchange market to increase, and the Central Bank to accumulate additional foreign exchange when favorable conditions arise. In other words, although a $5 increase in oil prices does not change the exchange rate of the manat by itself, it strengthens one of the fundamental factors supporting the stability of the manat.

This process also coincides with the trends observed in the banking sector. As of August 1, the population's deposits in the banking sector amounted to 17,896.7 million manat. At the same time, the volume of total deposits in the banking sector exceeded 44 billion manat. These figures indicate that a significant amount of domestic financial resources have been accumulated in the economy.

Thus, several positive factors are currently moving in the same direction in the Azerbaijani economy: high oil prices, a current account surplus, Central Bank reserves of $15.3 billion, deposits in the banking sector of more than 44 billion manat, and savings of the population of about 17.9 billion manat.

The $5 increase in Goldman Sachs' forecast gains importance precisely against this backdrop. If high oil prices continue for a long time, more favorable conditions will be created for the state's oil revenues, foreign exchange inflows will be supported, and the Central Bank's ability to accumulate reserves will expand. This means a further increase in the macroeconomic buffer against external shocks.

However, there is a difference to consider here. Goldman Sachs's $80 Brent forecast for 2027 is not a negative scenario for Azerbaijan. On the contrary, this price is $15 higher than the $65 envisaged in the 2026 budget. However, since Azerbaijan's actual oil is currently above $100, the $80 scenario represents a certain normalization at today's income level.
Therefore, the main message of Goldman Sachs' forecast for Azerbaijan,“oil will increase by another $5,” is that the likelihood of high oil prices continuing for a longer period of time is increasing. Against the backdrop of Azerbaijan's current $15.3 billion in foreign exchange reserves and a strong domestic deposit base, this could further strengthen the country's resilience to external financial shocks.

Ultimately, the most important issue for Azerbaijan is not how much oil will increase in the short term, but how long the high price will last. Because rather than a few-day price spike, a long-term oil price in the $80–100 range can have a more lasting impact on the country's budget, balance of payments, foreign exchange reserves, and manat stability. Current indicators show that Azerbaijan is entering such a period with a larger foreign exchange buffer than in previous years.

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