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The injection of Russian oil into Azerbaijani oil has led to an increase in the level of organic chlorides in its composition, which has led to a drop in the price

The quality of Azeri crude transported via the Baku-Tbilisi-Ceyhan pipeline has deteriorated, causing the price of Azeri Light to fall. Reuters reports that on July 22, the price differential between Azeri crude and Brent crude fell to its lowest in four years.

Several industry sources told Reuters on Tuesday that elevated levels of organic chlorides were detected in some cargoes of Azeri crude transported via the BTC pipeline, causing loading disruptions.

The State Oil Company of Azerbaijan (SOCAR) did not respond to a request for comment.

SOCAR sold 650,000 barrels of Azeri BTC crude to Trafigura between August 9 and 13 at Dated Brent plus $0.45 per barrel. In addition, between August 9 and 13, SOCAR sold 650,000 barrels of Azerbaijani BTC oil to Total at Dated Brent plus $0.40 per barrel. The price of the transactions was approximately $1.05-$1.10 per barrel lower than the latest forecasts.

It is worth noting that Azeri Light oil was considered the highest quality due to its composition and therefore was always sold on average $2-3 (sometimes $3-4) more expensive than Brent oil. Now, as you can see, the difference between the price of Azeri Light and Brent oil has decreased to a minimum, amounting to only 40-45 cents.

The deterioration in the quality of Azerbaijani oil may be due to the injection of lower-quality Russian oil into the Baku-Tbilisi-Ceyhan pipeline. It is known that in recent years, Russian has increased oil supplies to Azerbaijan as an alternative export route. Previously, in order not to reduce the quality of Azerbaijani oil, oil purchased from Russia was mainly sent for local processing, and the same volume of Azerbaijani oil was transported via BTC. However, in recent years, oil production in Azerbaijan has been declining, and it seems that SOCAR has begun to compromise on quality issues in order to maintain stable export volumes.