Baku analysts assessed the prospects for developing trade relations with Yerevan

Trade and economic cooperation between Azerbaijan and Armenia, although mutually beneficial, will be limited in the near future. Energy supplies from Azerbaijan could weaken Armenia's dependence on Russia, according to analysts in Baku.

As reported by the "Caucasian Knot," in October 2025, the President of Azerbaijan announced the lifting of all restrictions on cargo transit to Armenia. Armenian authorities considered this an important step in opening regional communications. In early November 2025, a shipment of Russian grain arrived in Armenia via Azerbaijan for the first time since the 1990s. The Armenian government noted that this fulfilled one of the agreements reached in the United States, which contributes to strengthening peace between Yerevan and Baku. On February 4, at a meeting in the UAE, the President of Azerbaijan and the Prime Minister of Armenia discussed the ongoing economic cooperation and agreed to explore opportunities to expand trade between the two countries.

Trade and economic cooperation between Azerbaijan and Armenia currently consists of oil product supplies, Ilham Shaban, head of the Caspian Barrel Oil Research Center, told a "Caucasian Knot" correspondent.

According to him, since the end of 2025, Azerbaijan has sent three trains with fuel to Armenia. Thus, on December 18, 2025, 1,220 tons of AI-95 motor fuel were sent from Azerbaijan to Armenia. On January 9, Azerbaijan exported 1,742 tons of AI-95 gasoline and 956 tons of diesel fuel to Armenia, and on January 11, 979 tons of AI-92 motor fuel.

“Thus, Azerbaijan supplied Armenia with about 5,000 tons of motor fuel in about a month and a half, which is approximately 10 percent of its needs for this period. Deliveries from Azerbaijan led to a decrease in gasoline prices in Armenia, especially for premium AI-95 grades. Armenia has the most expensive gasoline in the South Caucasus. "In Armenia, a liter of gasoline was 20 cents more expensive than in Georgia; now, thanks to fuel supplies from Azerbaijan, prices in these countries have equalized," Shaban said.

According to him, Azerbaijan benefits from supplying fuel to Armenia due to the diversification of its petroleum product export markets.

Unlike crude oil, Azerbaijan supplies petroleum products only to regional countries, as the country's refineries only produce a limited amount of premium gasoline, making Armenia another destination for motor fuel.

For Armenia, Shaban explained, Azerbaijani gasoline is cheaper than supplies from Russia, Romania, and other countries.

"It's one thing when fuel is loaded into rail tank cars in Azerbaijan and delivered to Armenia via Georgia in less than 24 hours." Another situation is when oil must be delivered from Russia or Romania by sea to the Georgian port of Poti, loaded into rail tank cars, and transported to Armenia. Transportation costs are incomparably higher. “Transporting gasoline from Russia by tanker truck through Upper Lars would be even more expensive for Armenia,” Shaban said.

However, in his opinion, Azerbaijan’s export capacity is limited and Baku is unlikely to be able to significantly increase supply volumes in the near future.

Therefore, he believes, Armenia will remain largely dependent on Russia for fuel supplies in the near future. However, if gasoline supplies from Azerbaijan are stable, Armenia will experience price competition, which will contribute to lower prices.

According to Shaban, in addition to petroleum products, Azerbaijan can also supply Armenia with petrochemical products, including mineral fertilizers, as well as agricultural products.

Chairman of the Political Committee of the Republican Alternative Party and co-founder of the Republic Research Center, Natig Jafarli believes that if the peace process is successfully completed, In the near future, in addition to oil product supplies, Azerbaijan could begin pumping gas to Armenia.

"With a small investment, the gas transportation system to Armenia that existed during the Soviet era could be restored. There is a gas pipeline to Azerbaijan in the western direction; it is simply necessary to restore the section of the pipeline on the border between the two countries," Jafarli told a "Caucasian Knot" correspondent.

According to him, it is entirely feasible to pump approximately 500,000 cubic meters of gas from Azerbaijan to Armenia annually, which is approximately a third of the republic's needs.

"Today, Armenia's natural gas needs are met by Russia at 75 percent, and by Iran at 25 percent. Iranian gas is supplied to industrial enterprises. The population receives only Russian-produced gas. This, of course, creates a price monopoly. "Therefore, if Armenia imports gas from Azerbaijan, the country's dependence on Russia will be significantly reduced," Jafarli noted.

However, overall, Armenia is highly economically dependent on Russia and for this reason is refraining from making drastic changes to its economic policy, he emphasized.

"Moscow can use its economic leverage at any time, for example, provoking an energy crisis. Therefore, Yerevan is pursuing a cautious policy, refraining for now from nationalizing railways and gas distribution networks, which are currently owned by Russian capital. "If a reliable system for supplying gas and oil products from Azerbaijan is established, Armenia will have alternative sources of supply in the event of a crisis during a critical period," Jafarli believes.

In general, touching on the prospects for trade and economic cooperation, Jafarli noted that it is currently possible between large state-owned enterprises.

"For limited ties between large state-owned enterprises, government approval is sufficient. However, to develop cooperation involving the private sector and small and medium-sized businesses, a number of legal and technical issues must be resolved, and a system for bank transfers and insurance must be established. Without resolving these issues, business ties will not work,” Jafarli said.

As for the structure of potential trade turnover, according to Jafarli, in addition to oil products and gas, Azerbaijan can supply Armenia with petrochemical and agricultural products, in particular vegetables and fruits.

Armenia can also supply copper to Azerbaijan, as well as agricultural products, in particular potatoes. Moreover, according to Jafarli, Azerbaijan may be interested in purchasing fresh water from Armenia, which is abundant in resources.

He also pointed to the possibilities for developing border trade. “As peace and mutual trust strengthen, border markets can gradually be created, where business representatives can supply products and goods in demand in the opposite country,” Jafarli noted.

In his opinion, in the near future, the volume of trade between the two countries could reach several million dollars.

"Of course, expanding and approaching the volumes of Azerbaijan's trade and economic cooperation with, for example, Georgia, is a matter of a more distant future. In general, much will depend on the extent to which both parties offer competitive prices compared to other suppliers." “Imports of motor fuel from Azerbaijan have already led to a decrease in gasoline and diesel prices in Armenia by about 10 percent,” Jafarli said.

While there is a lot of “PR” in this, both sides are trying to show their commitment to Donald Trump’s “peace agenda” and are playing along with him.

According to Togrul Juvarli, a member of the Azerbaijan National Public Committee for European Integration, trade and economic cooperation between Azerbaijan and Armenia is still “fragmented.”

“Frankly speaking, while there is a lot of “PR” in this, both sides are trying to show their commitment to Donald Trump’s “peace agenda” and are playing along with him,” the analyst told a “Caucasian Knot” correspondent.

In his opinion, Azerbaijani fuel supplies to Armenia are more of a “symbolic nature” and these volumes cannot yet be Substitute imports into this country from traditional sources.

Juvarly believes that for full-fledged trade and economic cooperation to take place, a peace agreement must come into force, trust must be established between societies, stereotypes of hostility must be overcome, and people themselves must understand the benefits of economic cooperation.

In his opinion, Armenia can develop economic relations with Azerbaijan without compromising its participation in the EAEU.

“The benefits for Armenia from participation in The EAEU's benefits are obvious. It provides trade and customs preferences, as well as employment benefits for its member countries. Furthermore, the Armenian economy is closely tied to Russia's.

Armenia will not be able to obtain much of what it supplies from EAEU countries. Therefore, cooperation with Azerbaijan cannot reduce Armenia's dependence on the EAEU, but it can create alternatives, which will generate price competition for certain goods," Juvarly said.

In his opinion, Armenia will remain in the EAEU until the prospect of its genuine accession to the European Union is outlined.