The Caspian Sea region presently is a significant, but not major, supplier of crude oil to world markets, based upon estimates by BP Amoco and the U.S. Energy Information Administration, U.S. Department of Energy. The region output about 1.4–1.5 million barrels per day plus natural gas liquids in 2001, 1.9% of total world output. More than a dozen countries output more than this top figure. Caspian region production has been higher, but waned during and after the collapse of the Soviet Union. Kazakhstan accounts for 55% and Azerbaijan for about 20% of the states' oil output.
The world's first offshore wells and machine-drilled wells were made in Bibi-Heybat Bay, near Baku, Azerbaijan. In 1873, exploration and development of oil began in some of the largest fields known to exist in the world at that time on the Absheron Peninsula near the villages of Balakhanli, Sabunchi, Ramana, and Bibi Heybat. Total recoverable reserves were more than 500 million tons. By 1900, Baku had more than 3,000 oil wells, 2,000 of which were producing at industrial levels. By the end of the 19th century, Baku became known as the "black gold capital", and many skilled workers and specialists flocked to the city.
By the beginning of the 20th century, Baku was the center of the international oil industry. In 1920, when the Bolsheviks captured Azerbaijan, all private property, including oil wells and factories, was confiscated. Rapidly the republics oil industry came under the control of the Soviet Union. By 1941, Azerbaijan was producing a record 23.5 million tons of oil per year – its Baku region output was nearly 72 percent of the Soviet Unions oil.
In 1994, the "Contract of the Century" was signed, heralding extra-regional development of the Baku oil fields. The large Baku–Tbilisi–Ceyhan pipeline conveys Azeri oil to the Turkish Mediterranean port of Ceyhan and opened in 2006.
The  oil field in the Russian section of the body of water was discovered in 2005. It is reportedly the largest found in 25 years. It was announced in October 2016 that Lukoil would start production from it.