Turan Research Center

Turan Research Center Director Joseph Epstein spoke with RFE/RL's Azattyq Asia about the implications of the Strait of Hormuz crisis for Central Asia's energy producers. Below is an English translation of his comments, which appeared in the original Russian-language article.

On the scale of the crisis:

"In terms of the volume of supply under threat, this crisis is potentially larger than the 1973 embargo. The Arab oil embargo of that year removed roughly 4–5 million barrels per day from the market. According to JPMorgan estimates, the reduction in production and exports due to the closure of the Strait of Hormuz could exceed 4 million barrels per day within weeks, and if Persian Gulf states exhaust their storage capacity and are forced to shut in production — which is already happening in Kuwait and Iraq — the cumulative scale of supply disruption could reach levels the modern oil market has never faced."

On the duration factor:

"If Iran's naval and missile capabilities are sufficiently degraded and the strait reopens, markets will begin to normalize. For Asia, however — especially India, Japan, South Korea, and LNG-importing countries across South and Southeast Asia — the short-term pain is very real. The situation much more closely resembles the 1973 experience: a physical supply deficit compounded by price inflation. And it is precisely in this context that the strategic significance of Central Asia rises sharply — as a landlocked alternative dependent on no maritime strait."

On the insurance dimension:

"Iran didn't need to mine the strait — it only needed to make oil and gas transit uninsurable. We are watching in real time as roughly 20 percent of global oil trade and approximately 20 percent of LNG trade is effectively removed from the market — not by a naval blockade, but by cheap drones and the insurance market's reaction to them."

On Kazakhstan's paradox:

"This is one of the great ironies of the moment. Oil prices surged roughly 35 percent in a week — Brent exceeded $92 per barrel — and Kazakhstan, as a major oil producer, should theoretically have reaped enormous revenue gains. But it cannot, because its export infrastructure is paralyzed. Around 80 percent of Kazakhstan's oil exports flow through the CPC pipeline to the Black Sea terminal at Novorossiysk, and that infrastructure has been seriously damaged by Ukrainian drone strikes since November 2025. Currently, only one of the terminal's three single-point moorings is operational. In other words, the price windfall exists on paper, but Kazakhstan physically cannot bring sufficient volumes to market to capitalize on it."

On the structural vulnerability:

"What is happening underscores Kazakhstan's structural vulnerability — its windfall revenues remain in the ground due to critical dependence on a single export corridor."

On the China factor:

"China, which imported roughly 40 percent of its oil through the Strait of Hormuz, is now extremely interested in locking in supplies from Central Asia — primarily from Kazakhstan via the Atasu–Alashankou pipeline. This is a powerful combination — push from Kazakhstan and pull from China. However, the scale is limited: even at full capacity, Atasu–Alashankou can transport only a fraction of CPC volumes. Moreover, the supporting infrastructure — refining, spur lines, rail connections — is not yet ready for a rapid large-scale shift. The direction of travel is clear, but the pace of change is measured in years, not months."

On Turkmenistan and European gas:

"Theoretically, yes — and the political momentum has never been stronger. Turkmenistan holds the world's fourth-largest proven gas reserves, and Turkmen gas began flowing to Turkey last year through swap agreements via Iran. Turkey's ambassador to Ashgabat explicitly called for accelerating construction of the Trans-Caspian Pipeline as a medium- and long-term solution. But there are real constraints. Most of Turkmenistan's untapped production capacity is concentrated at the Galkynysh field in the southeast — far from the Caspian coast. Turkmenistan has committed to more than doubling its gas exports to China, bringing them to 65 billion cubic meters per year, which means direct competition for Turkmen gas between Chinese and European demand."

On Turkmen gas volumes for Europe:

"Turkmen gas could become a meaningful supplement to European supplies — on the order of 5–15 billion cubic meters per year through the Southern Gas Corridor — but it will not replace Russian or Qatari volumes on a large scale. Moreover, Turkmenistan's own policies sometimes limit its export potential. For instance, its 'delivery to the border' policy, which requires importers to build pipelines to the Turkmen border, is a serious obstacle."

On the collapse of Iran transit:

"If Iranian infrastructure degrades or transit becomes impossible, the only significant gas export route remaining for Turkmenistan will be the pipeline to China — which only deepens the dependence it has been trying to escape."

On the systemic risk:

"This crisis clearly demonstrates that Central Asia's energy infrastructure was built for a geopolitical reality that no longer exists. Every major export route runs through a country that is either involved in a war or under serious pressure — Russia, Iran, or regions where they can influence maritime routes. This is a systemic risk that cannot be solved by a single pipeline. This crisis is a strategic turning point, but whether Central Asia can capitalize on it depends entirely on infrastructure investment decisions made in the next 2–3 years."

On the three conditions for real change:

"The Trans-Caspian Gas Pipeline moves from concept to construction; Kazakhstan diversifies its export routes beyond the CPC; and Western — above all American — capital begins to treat the region's infrastructure as a strategic priority rather than merely a commercial project."

On the historical pattern:

"History shows that energy diversification projects not launched during a crisis are almost never launched afterward."

Read the full article on RFE/RL's Azattyq Asia (Russian).

Joseph Epstein is the Director of the Turan Research Center.