What if Armenia and Azerbaijan return to full-scale war?

Risk Matrix

Kinetic Escalation
Kinetic Escalation
SEVERE
Regional Spillover
Regional Spillover
HIGH
Global Economic Impact
Global Economic Impact
MODERATE
Nuclear Threshold Risk
Nuclear Threshold Risk
LOW
Recurrence RiskHIGH
Prior OccurrenceYES

Key Actors

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▸Assessment Details

Why NowMED

With Russia militarily and politically consumed by Ukraine, Azerbaijan perceives a unique window of opportunity to impose a final settlement on its terms. The failure of Western and Russian mediation to produce a breakthrough on the Zangezur corridor via diplomacy increases the likelihood that Baku will opt for a military solution.

Strategic TriggerHIGH

Following a breakdown in EU and Russia-mediated peace talks, a significant border clash involving artillery and drone strikes escalates beyond local command control. Azerbaijan launches a large-scale 'counter-terrorism operation' into southern Armenia, alleging provocations and aiming to secure a corridor to its Nakhchivan exclave.

Pressure PointsHIGH

·Control over the Zangezur Corridor connecting mainland Azerbaijan to its Nakhchivan exclave through Armenian territory.
·Final demarcation of the shared border, with military outposts established on contested strategic heights.
·Status of several small enclaves of territory each country holds within the other.
·Armenia's domestic political instability and pressure on PM Pashinyan to resist further concessions.

Possible ConsequencesMED

·A decisive Azerbaijani military advance into southern Armenia, securing key transport routes by force.
·A major humanitarian crisis with tens of thousands of displaced Armenians.
·CSTO credibility collapses as Russia fails to provide meaningful security assistance to member state Armenia.
·Risk of direct confrontation between Azerbaijan and Iran, which has declared any change to the Armenian-Iranian border a red line.

Market & Strategic ImpactMED

Oil
Upward pressure on Brent crude due to risks to the Baku-Tbilisi-Ceyhan (BTC) pipeline which runs near the conflict zone.
Gas
Increased volatility in European natural gas prices as the South Caucasus Pipeline (SCP) is threatened, complicating EU diversification from Russia.
Equities
Negative pressure on European energy companies invested in Azerbaijani resources and Turkish equities due to geopolitical risk.

Escalation RiskMED

HIGH — kinetic risk window inside the 30-day horizon.

Alliance ReactionsLOW

·The CSTO, led by Russia, offers only rhetorical support to Armenia, citing its own military commitments in Ukraine and avoiding a direct clash with the Turkish-backed Azerbaijani forces.
·Turkey provides extensive military, intelligence, and diplomatic backing to Azerbaijan, framing the operation as a legitimate response and solidifying a Turkic corridor to the Caspian Sea.

Watch IndicatorsHIGH

·Sustained, large-scale Azerbaijani force mobilization near Armenia's Syunik province.
·A significant cyberattack targeting Armenian government, military, or critical infrastructure.
·Public evacuation orders for civilians in Azerbaijani districts bordering Armenia.
·A formal declaration by Baku that diplomatic channels for resolving the Zangezur corridor issue are exhausted.

Next MovesLOW

7 Days

·Azerbaijan launches a focused offensive into Armenia's Syunik province, aiming to seize control of key roads and mountain passes.
·Armenia declares martial law, mobilizes its reserves, and makes an emergency appeal to the UN Security Council and the CSTO for intervention.

30 Days

·Azerbaijan attempts to consolidate territorial gains and force Armenia into signing a new treaty that codifies Azerbaijani control over the corridor.
·Iran stages large-scale military exercises on its border with Azerbaijan and may provide materiel support to Armenian forces to prevent a total collapse.

90 Days

·Russia attempts to deploy a new 'peacekeeping' force to salvage some influence, but is forced to accept new realities on the ground.
·Armenia's government faces collapse, potentially leading to a new administration that formally pivots away from the CSTO and towards Western security patrons.

What Invalidates This AssessmentHIGH

·A breakthrough agreement is signed on the Zangezur corridor that satisfies Azerbaijan's core demands for transit while respecting Armenian sovereignty.
·Deployment of a credible, armed international monitoring mission (e.g., from the EU or UN) along the Armenia-Azerbaijan border.
·A clear and credible 'red line' declaration from a major power (e.g., the US or France) with the willingness to enforce it with punitive sanctions.

Final AssessmentMED

A new war would likely result in a rapid Azerbaijani military victory, achieving its strategic goal of the Zangezur corridor. This would fundamentally reorder the South Caucasus, cementing Turco-Azeri dominance at the expense of a marginalized Armenia and a weakened, sidelined Russia. The primary wildcard remains the extent of Iran's response to a de facto border change.