As is well known, the price of oil on global energy markets has reached its highest level in recent years.
Yeniavaz.com reports that, like other crude oil brands, the price of Azerbaijan's Azeri Light crude oil is also rising.
It should be noted that since Azeri Light is not traded on global exchanges, its price is determined based on the price of Brent crude oil.
For reference, prices on the oil market are primarily determined by two mechanisms. One is spot pricing. This is the current selling price of oil. That is, if a refinery wants to buy real oil today, the amount it pays is considered the spot price. When market tensions intensify and urgent demand arises, spot prices can rise rapidly. The other mechanism is futures pricing. A futures price is the value of a contract concluded for the delivery of oil at a future date. For example, if the Brent crude oil futures price for May is $95, this means the buying company will purchase the oil at the price specified in the contract, $95, in two months.
Futures contracts also act as a form of insurance for companies. For example, companies concerned about future price increases mitigate their risks by entering into a contract in advance.
How is the price of Azerbaijani oil determined?
The price of grades such as Brent or WTI on global exchanges is determined by futures contracts. Azerbaijani Azeri Light crude is not traded on the exchange under a separate futures contract. The price of Azeri Light is determined by the spot mechanism. This price is primarily calculated based on the price of Brent crude. The spot price of Azeri Light is typically slightly higher than the futures price of Brent crude. This is due to the high quality of Azerbaijani crude. Azeri Light is considered a light crude oil with a low sulfur content.
For example, if Brent crude sells for $92, the price of Azeri Light crude can be around $95-96 due to its superior quality.

Elnur Ali