Eyewitnesses said police fired on unarmed protesters in the town of Zhanaozen, but the authorities say they were forced to defend themselves.
The clashes occurred when police tried to clear the town square, occupied by the workers for more than six months.
They are demanding better pay, but their action has been declared illegal.
The clashes came as Kazakhstan marked the 20th anniversary of independence from the Soviet Union, with celebrations throughout the country.
Correspondents say the unrest will come as a shock to President Nursultan Nazarbayev, who has ruled the republic since before independence and kept a tight rein on public protest.
Police moved in to clear the square early on Friday morning for independence celebrations but were charged by the oil workers.
An eyewitness told the BBC police had opened fire on the unarmed protesters and one man died in her arms from a shot to the chest.
Preliminary information indicated 10 deaths, with police officers among the injured, he added.
A team of investigators led by Interior Minister Kalmukhanbet Kasymov had flown to the town to “identify and punish the organisers”.
Oil workers at the Ozenmunaigas oil field, which employs the Zhanaozen workers, have higher than average salaries, but strike organisers say the workers are owed danger money for the tough conditions they work in.