Key highlights for the first six months of 2026:

• SOFAZ’s total assets stood at USD 72.6 billion (123 billion manats).
• Revenues generated from asset management activities totaled 3.6 billion manats.
• Oil and gas revenues from sales of hydrocarbons amounted to 4.9 billion manats.
• SOFAZ transferred 6.4 billion manats to the state budget.

The State Oil Fund of the Republic of Azerbaijan (SOFAZ) reports that its assets amounted to USD 73 542 million (125 021 million manats) at the beginning of 2026 and stood at USD 72 596 million (123 414 million manats) as of June 30, 2026.

During the period from January to June 2026, SOFAZ’s total revenues amounted to 8 531.3 million manats. The Fund's oil and gas revenues amounted to 4 953.4 million manats. Total revenues generated from asset management activities reached 3 577.9 million manats. Budget expenditures for the reporting period totalled 6 449.7 million manats.

Oil and gas revenues:

• SOFAZ's revenue from oil and gas agreements totaled 4 953.4 million manats, consisting of:

• 4 947.6 million manats from the sale of oil and gas,
• 0.9 million manats from bonus payments and transit revenues,
• 4.9 million manats from acreage fees

It should be noted that during the reporting period, SOFAZ received 4 374.9 million manats from the Azeri-Chirag-Gunashli field and 437.1 million manats from the Shah Deniz field (gas and condensate)

Budget expenditures:

• Transfer to the State budget. Within the framework of the 2026 SOFAZ budget implementation, a total of 6 420.0 million manats were transferred into the state budget during the reporting period.
• Project expenditures. In January-June 2026, 14.3 million manats were allocated to the following ongoing projects:

• 2.1 million manats were directed to financing the "2019-2023 State Program on increasing the international competitiveness of the higher education system of Azerbaijan,"
• 12.3 million manats were allocated for the "State Program for the Education of Youth at Prestigious Universities of Foreign Countries for 2022-2028."

• Operational expenditures. The operational expenditures of SOFAZ amounted to 15.4 million manats for the reporting period.

Extrabudgetary expenditures

During the reporting period, extrabudgetary expenditures arising from changes in gold prices and foreign exchange rates amounted to 3 688.1 million manats.

Current state of financial markets and its impact on the portfolio

Global financial and energy markets experienced high volatility during the first quarter of 2026, dominated by the outbreak of the US-Iran conflict, which reverberated across all asset classes. During the second quarter, positive returns were generated on the bond portfolio and equities, while gold made a negative contribution to total funds under management.

Government bond yields declined in the first quarter as investors sought safety, supporting bond prices. This reversed sharply from late in the first quarter onward as surging oil prices reignited inflation expectations, driving yields higher across advanced markets. European markets bore the brunt of energy-driven inflation dynamics, while the USD-denominated debt portfolio demonstrated relative resilience throughout the period.

Global equity markets performed well early in the first quarter before declining through the remainder of the first quarter as the Iran conflict escalated and geopolitical risk premiums rose. Markets staged a powerful recovery in the second quarter, which is the best quarter for stocks since 2020, driven by the AI investment theme and easing oil prices following ceasefire hopes. Late in the second quarter brought renewed volatility as concerns over stretched technology valuations triggered a fresh selloff in semiconductor stocks.

Gold surged through the first quarter, driven by US dollar weakness, concerns over Federal Reserve independence, and a structural investor shift away from sovereign bonds and currencies into hard assets. Prices fell sharply late in the first quarter and continued declining through the second quarter as real yields climbed.