Geopolitical tensions may affect Kazakhstan’s exports to the Middle East

Rising tensions in the Middle East may slow Kazakhstan’s trade with countries in the region due to increased costs for logistics, insurance and financial settlements. This was reported by LS citing Rahimbek Abdrakhmanov, head of the Center for Political and Economic Analysis.

Assessing how the current geopolitical situation could affect trade turnover between Kazakhstan and Iran as well as other Middle Eastern countries, the expert noted that the main risk is related not so much to the scale of direct trade, but to Iran’s role as both an important market and a southern transit gateway. According to him, in recent years trade turnover between Kazakhstan and Iran has fluctuated between $300–600 million annually.

“For Kazakhstan’s overall foreign trade this is not a critical volume, but for certain niche sectors it remains a sensitive channel. Especially because through Iran Kazakhstan gains access not only to its domestic market but also to the ports of the Persian Gulf and markets of South Asia,” Abdrakhmanov explained.

One of the most vulnerable areas of cooperation remains agricultural exports. In different years Kazakhstan shipped around 0.5–1 million tons of grain annually to Iran, and in some years volumes exceeded 1.2 million tons. For Kazakhstan this represents about 5–10% of total grain exports. For Iran these supplies are also important since the country imports around 6–8 million tons of grain annually and up to 10 million tons in years of poor harvests.

Another area of cooperation involves oil logistics through swap operations with Iran. Under this scheme oil shipments are exchanged without physically traveling the entire route. Kazakhstan supplies oil to northern Iran via the Caspian Sea, while Iran exports an equivalent volume of oil from its southern ports in the Persian Gulf to Kazakhstan’s buyers.

According to the expert, such operations are currently temporarily suspended but they have significant potential for diversifying oil supply routes. With Kazakhstan’s actual oil exports in 2025 at about 1.4 million barrels per day, the technical capacity of swap operations through Iran is estimated at 300–500 thousand barrels per day. If sanctions restrictions are eased, Iran could become an important alternative transport corridor for diversifying oil and gas supplies.

At the same time, Abdrakhmanov noted that operational risks remain related to transport routes and financial settlements in trade with Middle Eastern countries.

“The main problem is not the physical closure of routes but the rising cost of logistics and financial operations. Already, amid tensions, maritime insurance premiums are increasing, freight rates are rising and banks are tightening compliance procedures and payment checks related to operations with the region. This can slow settlements and increase trade costs even if routes formally remain open,” the expert explained.

The most vulnerable link remains maritime logistics. Around 20% of global LNG supplies and roughly one-third of global seaborne oil shipments pass through the Strait of Hormuz — about 13 million barrels per day. Before the escalation of tensions, 200–300 ships passed through the strait daily, meaning that even partial restrictions on shipping quickly affect insurance costs and transportation prices.

According to the economist, the current geopolitical situation may lead to a redistribution of trade flows, and the effects for Kazakhstan may be both negative and positive.

On the one hand, rising tensions in the Middle East increase uncertainty for investors and may slow trade with the region due to higher logistics and financial costs.

On the other hand, instability of traditional routes may increase interest in alternative transport corridors through Central Asia. In this case Kazakhstan has an opportunity to strengthen its role as a transit hub between Europe and Asia.

The expert noted that in recent years the Trans-Caspian International Transport Route (the Middle Corridor), which runs through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and Turkey, has been gaining importance as it allows bypassing zones of heightened geopolitical risks.

According to Abdrakhmanov, in the coming months some supplies may temporarily decline due to higher logistics costs, increased maritime insurance rates and stricter banking payment checks. This may particularly affect grain shipments across the Caspian Sea and other goods traded between the countries.

“However, trade will not stop completely. Iran needs imported grain and other agricultural products from the Caspian region, while Kazakhstan is interested in diversifying export supplies — primarily grain, oilseeds and metal products. Access to southern transport routes and Persian Gulf ports is also important for reaching Middle Eastern and South Asian markets,” he noted.

Therefore, according to the analyst, the most likely scenario is gradual adaptation of trade. Supplies will continue but with more complex logistics, possible redistribution of routes through the Caspian and Central Asia, and more cautious financial settlements. As a result trade volumes may temporarily decline, but a systemic rupture of economic ties between the countries is not expected.