Global Oil Price Reset and Its Impact on Georgia

The global energy market has once again undergone a sharp correction — oil prices have significantly decreased, and this trend has already impacted the Georgian market. The decline in prices is being recorded simultaneously on both the international and domestic markets, indicating that global factors continue to exert significant influence on regional economies, especially those characterized by high energy dependence.

Following the latest trading session, the price of U.S. WTI crude oil fell by 7.41%, reaching $61.99 per barrel. Meanwhile, the price of Brent crude oil, another major international benchmark, dropped by 6.5% to $65.58 per barrel. This decline is mainly driven by a slowdown in global economic growth, reduced demand from China, and an unexpected increase in U.S. energy reserves, leading the market to believe that supply is exceeding demand.

Such changes have already been reflected at Georgian gas stations. Over the past week, the price of fuel at some branded gas station networks has gradually decreased by 5 to 10 tetri. The price drop became particularly noticeable this week, as more operators joined the trend. However, because fuel prices in Georgia depend on multiple factors — including transportation costs, the exchange rate of the lari, and international procurement strategies — the decrease in prices is still being reflected cautiously and unevenly across the market.

It is worth noting that the primary causes of the price reduction in global markets are not only the imbalance between supply and demand but also shifts in geopolitical expectations and revisions of economic outlooks. In the current situation, countries with high import dependence — Georgia among them — might temporarily benefit from relatively lower prices, which could reduce inflationary pressure and have a positive effect on consumer spending.

However, historical experience shows that energy resource prices are highly unpredictable, and the current decline may prove to be temporary. For instance, any geopolitical tension in the Middle East or decisions by major producing countries to cut supply could immediately push prices back upward.

Adapting to such a backdrop and to the lack of predictability in the global economy has already become a structural challenge. For Georgia, as an energy-dependent country, the most appropriate strategy would be to diversify its market, increase energy efficiency, and, most importantly, expand the use of alternative energy sources, including renewables.

Ultimately, even if temporary, the decrease in oil prices will serve as a welcome relief for consumers and may also provide a small boost to economic activity.