Day: December 10, 2025

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Azerbaijan to sell oil to Armenia

Without broad coverage in the Azerbaijani media, Azerbaijan is preparing to sell petroleum products to Armenia — the first step towards economic cooperation between two countries that have been adversaries for decades.

Although official statements claim the issue is still “under discussion”, in reality Baku and Yerevan have already reached an agreement.

As evidence of this, the Azerbaijani government has requested formal permission from Georgia to transit fuel through its territory to Armenia, and even the details of the first shipment have been agreed.

Baku, however, appears keen not to draw domestic attention to this historic development. Public debate has focused mainly on discussions around Georgia’s transit tariff. The article examines the political implications, economic prospects and public reaction to this “secret oil deal.”

The commentary was prepared by a regional analyst. The terms, place names and views expressed reflect only the position of the author or the community they represent, and do not necessarily correspond to the views of JAMnews or its staff.

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Political implications and regional context

Although the Azerbaijani authorities are moving ahead with the oil deal, they are in no hurry to announce it publicly. Official statements remain deliberately vague, and local media have given the development almost no coverage.

The government is clearly mindful of long-standing anti-Armenian sentiment. For a society that regained its territories in 2020 and has yet to sign a final peace agreement, selling fuel to a country still widely viewed as an adversary can appear contradictory.

Observers note that there is still no solid political or legal framework for exporting Azerbaijani petroleum products to Armenia, which is why the deal has generated significant public debate.

Even though pro-government media have tried to present the move as a “humanitarian gesture”, critics close to the authorities have raised a pointed question:

If no peace treaty has been signed and Armenia’s constitution still contains territorial claims against Azerbaijan, who can guarantee that, in the event of a renewed conflict, this fuel would not be used against our own military?

Such cautious assessments help explain why Baku is reluctant to give this development too much visibility.

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Moment of tension with Tbilisi

This issue has also drawn in a third regional actor — Georgia. The only route through which Azerbaijan can send fuel to Armenia runs across Georgian territory, as direct rail links between Baku and Yerevan have been suspended for nearly 30 years.

According to Minval Politika, a portal close to the Azerbaijani government, Georgia initially proposed an “astronomical tariff” — 92 dollars for 111 kilometres of transit (0.82 dollars per kilometre per tonne). By comparison, Azerbaijan Railways transports the same cargo over 680 kilometres for just 17 dollars, or 0.02 dollars per kilometre. Georgia’s tariff was 40 times higher, a move widely seen as a political signal rather than an economic calculation.

The Georgian government moved quickly to address the frustration coming from Baku. Following a joint appeal from Azerbaijan and Armenia on 5 December, Georgian Prime Minister Irakli Kobakhidze ordered that the first transit of Azerbaijani fuel be carried out free of charge.

Analysts say the episode created a degree of mistrust between Tbilisi and Baku. Georgia is keen to maintain its position as the South Caucasus’ main transit hub and is wary of potential alternative routes that may emerge if Azerbaijan and Armenia move towards reconciliation. Baku, meanwhile, expects Tbilisi — which it has supported for many years — to be mindful of its strategic interests.

What is clear is that the evolving peace process is reshaping the South Caucasus’ political landscape, with all sides now seeking to position themselves in this changing environment.

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Yerevan’s position

The Armenian government approaches the issue with caution. Officials avoid directly confirming that Armenia is buying Azerbaijani fuel. The Ministry of Economy instead reports talks with Georgia on transit and says Tbilisi has officially informed Yerevan that it will not apply a tariff to the first shipment. As a result, the focus shifts from Azerbaijan to Georgia’s gesture.

Even so, Armenia effectively acknowledges the arrangement. Economy Minister Gevorg Papoyan said that if the transit goes ahead, the first shipment will be tariff-free and later shipments will be subject to standard transit fees. He welcomed Georgia’s step and described it as a symbolic gesture.

Armenia imported grain through Azerbaijan for the first time in November. Fuel has now appeared on the December agenda. Prime Minister Pashinyan can frame this as an economic opportunity. Yet opposition groups in Armenia view these moves with mixed feelings.

Azerbaijani analysts argue that for a society that has perceived Azerbaijan as an enemy for decades, reliance on Azerbaijani fuel may feel like a blow to national pride.

Pashinyan’s government justifies the move by saying it wants to reduce dependence on Russian energy and lower prices.

More than 60 percent of Armenia’s fuel imports come from Russia. In 2024 this included 230,000 tonnes of petrol and 175,000 tonnes of diesel. Armenia covers the rest of its demand through Iran, Romania, as well as suppliers such as Malta and Turkey.

Buying Azerbaijani petrol and diesel can be seen as an effort to loosen Armenia’s energy dependence on Russia. For Pashinyan, who seeks closer ties with the West, this offers economic and geopolitical benefits.

The ruling Civil Contract party aims to weaken Moscow’s leverage ahead of the parliamentary elections scheduled for June 2026. Energy diversification could reduce Russia’s influence.

If Pashinyan’s team wins the election, Armenia is likely to continue moving away from Russia. The chances of a peace deal with Azerbaijan would also rise. The fuel arrangement between Baku and Yerevan therefore carries political significance that goes far beyond bilateral ties. It has become part of a wider geopolitical game involving Russia, the United States and Georgia.

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Economic prospects and benefits

Under the current plan, Azerbaijan will supply a limited amount of fuel to Armenia in a single shipment, likely a trial, first batch.

Although not officially confirmed, it is expected to include petrol and diesel. Experts note that, since Armenia lacks a refinery, the country cannot process crude oil even if it were imported. This means the deal involves refined petroleum products, not crude oil.

Fuel produced by Azerbaijan’s State Oil Company (SOCAR) has long been sold on the Georgian market; now a small portion may be redirected to Armenia. The country’s annual fuel demand is modest — around half a million tonnes — most of which has so far been supplied by Russia. For Azerbaijan, supplying this volume poses no significant burden or economic risk.

The main benefits for Armenia could be lower fuel prices and diversification of supply sources.

Local experts believe that introducing Azerbaijani products into the market could lead to cheaper petrol in Yerevan. Direct rail imports from Georgia reduce logistics costs compared with maritime or road shipments. In November, the delivery of Russian grain via Azerbaijan reportedly cost Armenian bakers less, and a similar effect could apply to fuel.

Full economic cooperation, however, depends on several conditions. There is currently no direct railway link between Azerbaijan and Armenia. Lines that existed previously fell into disuse due to the conflict. If the proposed TRIPP route is implemented, transport between the two countries could become much simpler.

Opening the TRIPP route would effectively establish direct connections between Azerbaijan and Armenia. This would allow Baku to supply fuel and other goods with significantly lower transport costs. For now, however, all shipments must transit through Georgian territory.

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Azerbaijan to sell oil to Armenia