Azerbaijan's external economic position remains very strong despite risks stemming from the Middle East conflict, according to a macroeconomic report on CIS countries by ING Group, the Netherlands' largest banking holding, as cited by Report.az.

ING raised its 2026 Brent crude price forecast by $20 to $82 per barrel, noting that risks are skewed to the upside. The bank said the Middle East war is affecting the CIS region through higher fuel prices, reduced global risk appetite, potential trade disruptions, and rising inflation. Higher oil prices improve export prospects for Azerbaijan and Kazakhstan while putting pressure on Armenia, which depends on energy imports.

Every $10 increase in oil prices adds approximately $3bn to Azerbaijan's annual export revenues — equivalent to 4% of GDP — and generates $1.5bn-2bn in additional budget revenue. Analysts noted that Baku may need to increase defence and security spending, though the overall fiscal position remains strong: the consolidated budget surplus stood at 2.6% of GDP in 2025, while sovereign savings exceed 100% of GDP.

Azerbaijan's fiscal break-even oil price has remained within its ten-year range at approximately $59 per barrel. Sovereign assets, including central bank reserves and State Oil Fund (SOFAZ) holdings, stand at roughly 115% of GDP — buffers that analysts say should be sufficient to maintain the AZN/USD rate at 1.70 even if oil prices temporarily fall below the break-even threshold.

GDP growth could return to the 2%–3% range in 2026–27, provided fiscal policy does not become overly restrictive and trade ties with the US, EU, and China continue to develop, the report said. Recent stabilisation in corporate lending growth, against a backdrop of relatively high industrial confidence indicators, points to a potential recovery in non-oil sector investment activity.

On inflation, ING noted that 2025 figures were broadly in line with historical averages, but that price pressures have accelerated following domestic utility tariff increases in early 2026. Food and services — key drivers of disinflation in 2024 — have since reversed trend. With nearly half of Azerbaijan's imports coming from regions exposed to Middle East-linked inflation risks, the overall CPI faces upside risks. A 10% rise in global food prices would add 1.5 percentage points to domestic inflation.

The current account surplus is underpinned by oil and gas exports, 62% of which go to the EU. US imports rose to 9% of the total in 2025, reflecting broader American strategic interest in the region in the context of the TRIPP project. Azerbaijan has also diversified its import geography, strengthening ties with China, which now accounts for 15% of imports, while reducing dependence on Russia to 11%.

Moody's maintains a positive outlook on Azerbaijan, whose ratings are firmly in investment grade territory. ING described Azerbaijan as an attractive credit and a reliable defensive asset in the event of a prolonged Middle East conflict or sustained oil price spike. The ongoing Armenia peace process is seen as a positive catalyst at this stage.