Azerbaijan’s ratings unaffected by sharp fall in int’l oil prices

Oil prices plummeted following OPEC's failure to agree on further production cuts during meetings on March 6.

OPEC+ did not agree to a proposed reduction of 1.5 million barrels per day to address an expected significant drop in global demand partly due to the spread of the coronavirus. The proposed cut was in addition to the current 2.1 million barrels per day production decrease set to expire at the end of March.

Shortly after the meetings, Saudi Arabia announced that it was immediately slashing its official selling price and would increase its production to over 12 million barrels per day in April after the current production cut expires.

Oil markets are now heading into a period of a severe supply-demand imbalance in second-quarter 2020.

In line with the new economic outlook by S&P Global Ratings, the agency anticipates a recovery in both GDP and oil demand through the second half of 2020 and into 2021 as the most severe effects from the coronavirus outbreak moderate.

On March 26, 2020, S&P Global Ratings affirmed its 'BB+/B' long- and short-term foreign and local currency sovereign credit ratings on Azerbaijan, Report informs referring to the rating agency’s website.

The outlook is stable.

"Because of the sharp fall in international oil prices, we have significantly lowered our oil price assumptions for 2020-2021," reads the report. "Nevertheless, Azerbaijan's government and external balance sheets are currently healthy and provide a buffer against external shocks."

The ratings are supported by Azerbaijan's powerful external and fiscal positions, which are underpinned by relatively low central government debt and significant foreign assets built up over several years.