Baku, August 16, 2025 — Azerbaijan’s oil sector continues to experience contraction, with crude oil and condensate output falling again in 2025.
According to the State Statistics Committee, between January and July 2025 the country produced 16.03 million tons of crude oil, including condensate. This represents a 5.4% decline compared to the same period in 2024. Commercial oil production mirrored this trend, also dropping 5.4% to 15.99 million tons.
In July 2025 alone, Azerbaijan extracted 2.34 million tons, down 6.3% year-on-year.
A Trend of Consecutive Declines
The current contraction follows a broader downward trend. In 2024, Azerbaijan’s total annual oil production reached 29.06 million tons, which was 3.6% less than in 2023. This means the country has now recorded two straight years of falling output.
Underlying Factors
Aging fields: The bulk of Azerbaijan’s oil comes from mature offshore fields, particularly the Azeri-Chirag-Gunashli (ACG) block. Declines in natural output are increasingly difficult to offset.
OPEC+ commitments: As part of production-limiting agreements, Azerbaijan has also capped its output in line with quotas.
Gas prioritization: The government and foreign operators are placing greater emphasis on natural gas development, particularly with the expansion of Shah Deniz and other fields, which may gradually shift investment away from oil.
Outlook
With production slipping below 30 million tons annually and signs of accelerating decline in 2025, Azerbaijan faces a pivotal moment. Unless new fields or enhanced recovery methods reverse the trend, oil output is expected to continue falling — with potential fiscal impacts given the state’s reliance on hydrocarbon revenues.
