S&P says Caspian is becoming key energy region amid Middle East escalation

The Caspian region is gradually moving to the forefront of the emerging architecture of the global energy market amid rising tensions in the Middle East, Wesley Monteiro, Middle East Market Engagement Lead at S&P Global Energy, said at the 2nd Caspian and Central Asia Oil Trade and Transport Forum in Baku, Report said.

Monteiro said the current situation is already prompting investors to reassess risk-return ratios, particularly given the instability of traditional supply routes. In this context, he said, regions capable of ensuring relatively stable supplies regardless of the situation in the Strait of Hormuz are coming to the fore.

He said three key regions are currently in focus: California, Kazakhstan and Israel. None of them depended on stability in the Strait of Hormuz, which gave them a significant geographic advantage, he added.

Monteiro also drew attention to the behaviour of Azerbaijan's Azeri Light crude, which he said has shown significant price volatility in recent months. According to him, an analysis of three price assessments for the grade against the Dated Brent benchmark showed sharp fluctuations in March.

He said the main conclusion is abnormal volatility, noting that the price differential has shifted from a high premium to a deep discount. The gap between peak values amounted to $15-$18 per barrel, he added.

Monteiro said this referred not to the absolute price of oil, but to the difference between the price of local grades and the global benchmark, which he said was particularly important for assessing suppliers' competitiveness in the global market.

According to the analyst, such fluctuations reflected not only short-term market factors but also deeper structural changes linked to the redistribution of oil flows, the growing importance of alternative routes and the increasing role of regions that do not depend on traditional flashpoints.