ALMATY, July 7 — For Central Asian economies watching global oil markets, the Strait of Hormuz is not a distant waterway. It is the pipeline through which roughly 20% of the world’s daily oil consumption flows, and any disruption there sends immediate shockwaves through budgets from Astana to Bishkek. Analysts have warned that a closure of the strait could push prices above $100 per barrel, a threshold that would reshape trade balances across the region.
The numbers are stark. During the 2019 attacks on tankers in the strait, oil prices spiked by about 4% in a single day.
That was a brief event. A prolonged closure, the International Energy Agency has warned, could trigger a global recession. For Kazakhstan, which relies on oil exports for a substantial share of state revenue, a price surge might initially appear beneficial.
But the IEA’s warning cuts both ways: a recession in major consuming nations would eventually crush demand and prices.
The importers most exposed
Major importers like China, Japan, India, and South Korea are heavily dependent on oil from the Persian Gulf. China is Kazakhstan’s largest trading partner and a key buyer of its crude. If a Hormuz disruption forces Beijing to scramble for alternative supplies, Central Asian producers could see a short-term windfall.
But the reverse is also true: if the disruption triggers a broader economic slowdown in Asia, demand for Kazakh oil could drop sharply. India and South Korea are also among the top destinations for Kazakh crude.
Officials in Nur-Sultan have long sought to diversify export routes, building pipelines to China and developing the Caspian Pipeline Consortium link to Russia’s Black Sea coast. But those routes have their own vulnerabilities. The CPC pipeline has faced repeated disruptions and legal challenges.
No single export corridor can fully insulate Kazakhstan from a global oil shock.
Insurance and the cost of risk
Iran’s actions in the strait affect more than just the price of crude. Insurance rates for shipping can triple during periods of heightened tension, data shows. That added cost ripples through the entire supply chain.
For Kazakh exporters moving crude by tanker from the Black Sea or Baltic ports, higher insurance premiums eat into margins. The company said that these costs are typically passed on to buyers, but in a volatile market, not every customer will absorb them.
The United States exported about 3.5 million barrels per day of crude oil in 2022, making it a major producer in its own right. But the U.S. still relies on stable global markets, officials noted. The U.S. Strategic Petroleum Reserve holds about 375 million barrels, but analysts have pointed out that this stockpile is not sufficient to offset a long-term closure of the strait.
That means Washington would have limited ability to calm markets if Hormuz were shut for weeks or months.
What to watch next
For Central Asian policymakers, the immediate question is whether tensions in the strait escalate further. The 2019 tanker attacks showed how quickly prices can move. A repeat event, or something larger, would test the region’s export infrastructure and fiscal planning.
Kazakhstan has built up some reserves from years of high oil prices, but those buffers are not infinite. The coming weeks will reveal whether the major importers — China, Japan, India, South Korea — can secure enough alternative supply to keep their economies running.
If they cannot, the global recession that the IEA has warned about will become a real risk. For a country like Kazakhstan, where oil revenues fund everything from pensions to infrastructure, that is a risk worth watching closely.
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