Azerbaijan-Armenia conflict isn’t spooking energy markets. Yet

With weeks to go before Azerbaijan is due to start piping gas to the European Union, a decades-old conflict with its Eurasian neighbor Armenia is flaring up again. So far, oil and gas markets have yet to be spooked by the conflict — perhaps because global energy demand was drastically reduced by the Covid-19 pandemic, meaning producers the world over have spare capacity should the worst-case scenario arise — the bombing of the pipeline and an ensuing environmental disaster. In normal times, a material disruption would likely boost energy prices.

The conflict centers on the Nagorno-Karabakh region claimed by both countries. In theory, it has the potential to disrupt oil and gas flows from Azerbaijan, since export pipelines from the Caspian Sea region’s second-biggest crude producer run within just 10 miles of its border with Armenia.