India and the Iran Oil Crisis: What the Strait of Hormuz Means for Us
Tensions in the Gulf have escalated after Iran’s Parliament approved a proposal to potentially close the Strait of Hormuz, pending a final decision by its Supreme National Security Council. This move comes in the wake of U.S. military strikes on three Iranian sites, reigniting concerns about global energy stability.
At the heart of this developing crisis lies a narrow strip of water with massive geopolitical significance. Here's why the Strait of Hormuz matters — and how its potential closure could impact India.
What is the Strait of Hormuz?
The Strait of Hormuz is a narrow waterway that connects the Persian Gulf to the Gulf of Oman, and further into the Arabian Sea. It lies between Iran and Oman, forming a critical maritime chokepoint for the transportation of oil and gas from some of the world’s top energy producers — including Iran, Saudi Arabia, and the UAE.
At its narrowest, the strait is just 33 km wide, with only a 3-km-wide shipping lane in each direction, making it vulnerable to blockades or attacks. Its strategic importance lies in its role as the primary route for global energy supplies.
Why Is the Strait So Important?
Oil and gas. According to the U.S. Energy Information Administration (EIA), over one-fourth of global seaborne oil trade and about 20% of worldwide oil and petroleum product consumption passed through the Strait of Hormuz in 2024 and early 2025. Additionally, nearly 20% of the global liquefied natural gas (LNG) trade—mainly from Qatar—also transited the strait.
There is no real maritime alternative to this route. If shipping were to be disrupted, energy prices would spike globally, affecting the cost of transportation, manufacturing, and daily commodities across the board.
While countries like Saudi Arabia and the UAE have developed alternate pipelines to bypass the Strait, their capacity remains limited. For instance:
Saudi Arabia's East-West Pipeline can handle 5 million barrels/day.
The UAE operates a 1.8 million barrels/day pipeline to the Gulf of Oman.
This pales in comparison to the 20 million barrels/day that normally flow through the Strait.
Could Iran Really Block the Strait?
Technically, yes. Iran could employ various strategies: laying sea mines, launching missile attacks, seizing commercial vessels, or conducting cyber warfare on shipping systems.
However, Iran has never actually blocked the Strait, even during intense conflicts like the Iran-Iraq War in the 1980s. There are key reasons for this restraint:
Iran relies on the Strait for its own exports, including oil and goods.
Regional players like Saudi Arabia and the UAE — now cautiously improving relations with Iran — would be alienated.
Its biggest oil buyer, China, might face energy shortages if the Strait is blocked, pressuring Tehran diplomatically.
Previously, Iran hesitated out of concern that disrupting global oil supplies would provoke a direct U.S. military response. But with the U.S. already taking military action, that deterrent is weakening.
Even so, the U.S. 5th Fleet, based in Bahrain, could respond quickly to any Iranian interference. But by the time calm is restored, the global economy could already face significant tremors.
How Will India Be Affected?
India is one of the top importers of oil that passes through the Strait of Hormuz. As per EIA estimates, about 84% of crude oil and 83% of LNG that transited the strait in 2024 was bound for Asian markets, with India, China, Japan, and South Korea being the major consumers.
While India does diversify its imports—sourcing oil from Russia, the U.S., Africa, and Latin America—the immediate concern is price volatility. A sudden disruption in the Strait could lead to global price surges, affecting domestic fuel prices, inflation, and even the government’s fiscal planning.
Moreover, if China—currently a major buyer of Iranian oil—shifts demand toward other producers due to prolonged disruptions, India may find itself in tighter competition for global supplies.
Conclusion
As the Strait of Hormuz remains on edge, the global energy order stands at a precarious juncture. For India, while supply diversification offers some cushion, rising costs and price instability are real risks.
The situation underlines the urgency for India to strengthen its energy security—whether through strategic petroleum reserves, long-term LNG contracts, or accelerated investment in renewables. The Strait of Hormuz may be thousands of kilometers away, but its tremors could be felt right at Indian petrol pumps.
RP Mishra
