Kazakhstan's Oil Export Bottleneck Threatens Global Supplies

Kazakhstan's oil exports are highly concentrated and vulnerable to disruptions, as evidenced by a recent incident that saw output halve in just one week. The country relies heavily on the Caspian Pipeline Consortium (CPC), which carries about nine-tenths of Kazakhstan's export capacity through Russian soil.

The CPC terminal near Novorossiysk is a critical chokepoint, and an attack on tankers at the terminal led to a 14% drop in Kazakh crude and condensate output in July. The hardware was not damaged, but the lack of alternative routes meant that production plummeted.

The recovery was swift, but loadings stopped again in early August due to war-risk premiums doubling for Black Sea calls. This is a sign of a concentrated system under pressure, which becomes uninsurable and impaired long after physical danger subsides.

The exposure runs deep, with American companies like Chevron holding 15% of CPC and ExxonMobil holding 7.5%. The European Union also relies heavily on Kazakhstan's oil, with three-quarters of this year's CPC crude going to the EU.