The sanctions policy against the Russian Federation has entered a phase of maximum pressure. The United States has imposed restrictions on major oil and gas corporations — Lukoil and Rosneft — while Brussels is preparing the EU’s nineteenth sanctions package aimed at further reducing Europe’s dependence on Russian hydrocarbons. Not only the parent companies but also regional subsidiaries have been blacklisted, reflecting the West’s determination to encompass the full vertical of supply chains and financial flows.
For Azerbaijan, historically and structurally integrated into the post-Soviet energy space, these developments are far from abstract. The United States has long pursued an extraterritorial approach to sanctions enforcement, applying its restrictions not only to adversaries but also to partners and allies. The precedent of Iran is instructive: European companies were forced to choose between access to the U.S. market and cooperation with Tehran, even in sectors not violating international law. The consequences — from the prohibition on Boeing sales to restrictions on Airbus components — became a textbook case of sanctions coercion.
So far, sanctions against Russia have not acquired a universal character and do not extend to third countries. Yet the key question remains how long this temporary exemption will last. Azerbaijan, meanwhile, possesses extensive experience of cooperation with Russian energy entities. Lukoil has operated in the country since 1994 as one of the first participants in the “Contract of the Century” and subsequent projects, including the Azeri–Chirag–Gunashli oilfields. Today, the company holds a 10-percent stake in the Shah Deniz gas project — the core resource base of the Southern Gas Corridor that connects the Caspian basin with European markets. In addition, Russian entities maintain downstream assets, including storage facilities and a retail network of fuel stations.
While the sanctions imposed on the parent companies have not yet paralyzed their foreign operations, they introduce significant secondary risks — from delayed financial transactions to reputational pressure from Western partners. The effect of sanctions often manifests as concentric ripples: India, one of the largest importers of Russian crude in recent years, has been compelled under Western pressure to reduce purchases, fearing exposure to secondary sanctions. What once appeared to be a profitable model — importing Russian oil, refining it domestically, and exporting petroleum products to third markets — is becoming increasingly unsustainable.
A similar dynamic may affect Azerbaijan. As the West intensifies efforts to constrain Russian energy exports, attention to alternative supply corridors inevitably increases. The Southern Gas Corridor occupies a central position in this reconfiguration, but it also raises the political temperature around Baku, potentially exposing Azerbaijan to pressure both from Western partners seeking greater alignment and from actors attempting to exploit its logistical role in sanctions circumvention.
Sanctions pressure also manifests in less visible but equally consequential ways. Banking transactions between Russia and Azerbaijan have already become more complicated, directly affecting business operations and private remittances. At the same time, the European Union is advancing mechanisms to prevent the re-export of European consumer goods to Russia, including enhanced scrutiny of trade in intermediary countries. Such measures have not yet been applied to “third states,” but the direction of regulatory movement is clear.
The broader economic repercussions for Russia — the depreciation of the ruble, the decline in living standards, and the weakening of export potential — inevitably reverberate across neighboring economies. For Azerbaijan, this may lead to reduced demand for agricultural and consumer exports traditionally oriented toward the Russian market. Hence, the country faces the broader question of how to maintain equilibrium between energy pragmatism, economic interests, and geopolitical realities.
Official Baku has consistently rejected sanctions as a tool of political coercion, emphasizing their selective and often contradictory nature. The West’s long silence on Armenia’s occupation of Azerbaijani territories explains why sanctions are perceived in Baku with skepticism rather than moral approval. Yet sustainable policy requires rational adaptation rather than ideological positioning. In engineering terms, this is akin to seismic resistance: no one welcomes earthquakes, but structural flexibility must be designed in advance. The same principle applies to external economic policy.
Azerbaijan is neither a participant in nor a beneficiary of sanctions regimes. However, to ignore their cascading impact would be to underestimate the evolving architecture of the global economy. Building a flexible, adaptive framework for energy and financial cooperation with key partners is not a matter of political preference but a prerequisite for strategic resilience in an era defined by sanctions-driven transformation.
