Oil, gas and Iran economic analyst
A recent flurry of high-level meetings across Central Asia and the Middle East signals a quiet but marked shift: Iran and Russia are increasingly sidelined in the region’s political and economic realignments in favor of Arab states.
Once dominant mediators in the Armenia-Azerbaijan conflict, both were notably absent as the United Arab Emirates hosted direct talks between Armenian and Azerbaijani leaders late last week.
The meeting—described as positive by both sides—was the first time the two met face-to-face without intermediaries, according to Azerbaijani lawmaker Arzu Naghiyev.
Baku has long sought a way to connect the two territories of Azerbaijan separated by a tract of Armenian land. An existing plan for a 'corridor' is backed by Ankara but categorically rejected by Yerevan.
“Azerbaijan’s position on opening the Zangezur corridor to connect with Nakhchivan and Turkey is unequivocal,” Naghiyev told Iran International. “But the positions of Russia, Iran and others remain unclear.”
Tehran had previously threatened military action to prevent the corridor’s creation. But today, it appears unable to influence the outcome.
Tensions between Baku and Moscow have also escalated following the deaths of several Azerbaijani citizens in Russian custody.
In response, Azerbaijan shut down the Russian state-run Sputnik news bureau in Baku and arrested several of its staff. Meanwhile, Armenia’s pivot toward the West has further strained ties with Moscow.
Energy diplomacy
On July 4, the Nagorno-Karabakh region hosted an Economic Cooperation Organization (ECO) summit attended by leaders from Central Asia, Pakistan, Iran, and Turkey.
Russian officials were frustrated by Iranian President Masoud Pezeshkian’s participation, according to Israel’s Channel 12, especially as Azerbaijan was arresting Russian nationals.
Moscow made no public objection when Kazakhstan and Azerbaijan held joint drone drills days later.
Baku also hosted the head of Syria’s interim government last week, and reports suggest Israeli and Syrian officials held indirect discussions during the visit.
This followed Azerbaijan’s state oil company Socar acquiring a 10% stake in Israel’s Tamar gas field.
During the ECO summit, Turkish President Recep Tayyip Erdogan revealed Azerbaijan’s interest in exporting gas to Syria. A memorandum was signed on July 12 during the Syrian delegation’s visit to Baku.
Qatar has already begun supplying gas to Syria via Jordan, while Saudi Arabia and the United Arab Emirates are backing reconstruction efforts in opposition-held areas—bypassing the Assad regime and its traditional backers, Iran and Russia.
UAE leads the charge
Among Persian Gulf states, the UAE has emerged as the most active in regional diplomacy.
On July 13, Erdogan held a call with UAE President Sheikh Mohammed bin Zayed Al Nahyan, discussing the Kurdistan Workers Party (PKK) disarmament, the Armenia-Azerbaijan talks, and broader regional initiatives.
Trade reflects this deepening partnership: Turkish exports to the UAE surged 65% in the first half of 2025—the fastest growth among Turkey’s trade partners. Exports to Syria rose 46% in the same period.
Direct investment from Persian Gulf states abroad has jumped 50% since 2022, with 90% flowing to Central Asia, according to the Eurasian Development Bank.
Emirati firms manage all of Turkmenistan’s Caspian Sea oil production and own 30% of Azerbaijan’s Absheron gas field—the second-largest in the Caspian.
The UAE has invested more than $12 billion in Central Asia, with Saudi Arabia and Qatar accounting for almost $4 billion.
Arab states are stepping up across the region, increasingly appears to be at the expense of Iran and Russia.
