Iran moves to shut Strait of Hormuz: What it means for India and the world

First Post

22-06-2025

Iran's threat to close the Strait of Hormuz after US airstrikes on its nuclear sites could trigger a global oil shock, disrupt trade routes and push prices sky-high. With over 60% of its crude coming from the Gulf, India faces serious energy and economic risks. read more
Strait of Hormuz, Makran region in southern Iran and southwestern Pakistan, Gulf of Oman and the northern coast of Oman as seen from space. (Photo by NASA Earth Observatory/ AFP)
The Strait of Hormuz, the world's most critical oil chokepoint is back in global focus after Iran hinted at a possible closure following a major US airstrike on its nuclear facilities. If Iran follows through, the move could trigger a seismic shock across global energy markets and pose significant risks to major oil importers like India.
What sparked the threat?
Following the US bombing of three major Iranian nuclear sites this morning, Tehran has indicated that closing the Strait of Hormuz for shipping is one of the options on the table to pressure its adversaries.
On Saturday, President Donald Trump announced a 'very successful' military operation that targeted three Iranian nuclear sites—Fordow, Natanz, and Esfahan—with full payloads of bombs. In response, Iran's parliament indicated support for closing the Strait of Hormuz, although the final decision rests with its Supreme National Security Council.
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Esmail Kosari, a senior Iranian lawmaker and Revolutionary Guard commander, said the move to block the strait 'will be done whenever necessary.' Iran's state media has amplified these signals amid growing tensions with Washington, following what Tehran calls an act of 'unprecedented aggression.'
Why is the Strait of Hormuz so vital?
The Strait of Hormuz lies between Iran and Oman and connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. At just 21 miles wide at its narrowest point, it's one of the world's most strategic maritime arteries.
According to 2023 estimates, over 17 million barrels of oil—around 20% of global daily demand—pass through the strait each day. Key exporters like Saudi Arabia, Iraq, the UAE, Kuwait, Qatar, and even Iran itself rely on it for crude and liquefied natural gas (LNG) shipments. While alternate pipelines exist, they can only divert around 2.6 million barrels per day—barely a fraction of the daily flow through Hormuz.
How would a closure affect the world?
Global oil prices may skyrocket
A complete or even partial blockade could send oil prices soaring past $120–150 per barrel, depending on the length of the disruption. Brent crude has already surged above $90 in anticipation, with West Texas Intermediate (WTI) not far behind.
Energy crises in Asia and Europe:
Countries like India, China, Japan, and several European nations, all of which rely heavily on Gulf energy imports, could face inflation, energy shortages, and economic turbulence. Europe, already reeling from the fallout of the Ukraine war, may find itself in deeper crisis if Qatari LNG shipments are blocked.
According to a recent analysis by the International Energy Agency, even a brief disruption of passage through the Strait of Hormuz will have a significant impact on oil markets.
'With geopolitical and economic uncertainties affecting oil producers and consumers alike, oil supply security remains high on the international energy policy agenda,' it said.
Disruption to global shipping
Beyond oil, the Strait is a vital route for container ships and cargo vessels. Its closure would increase freight costs, delay shipments, and reroute vessels through longer, more expensive paths—adding to already strained global supply chains.
Stock market turmoil and recession fears:
Rising energy costs, shipping delays, and inflationary pressures could trigger panic across global stock markets. Central banks may be forced to intervene, and developing economies with heavy energy import bills could face new debt challenges.
Risk of wider war
The US, UK and France maintain strong naval presences in the Gulf. A closure would likely trigger military escort missions or even direct intervention to reopen the waterway—further inflaming regional tensions.
Why is India especially vulnerable?
Any blocking or disruption of traffic through the Strait of Hormuz – a narrow passage connecting the Persian Gulf to the Arabian Sea – will have significant global and regional impact including for India's energy security, strategic affairs experts said on Sunday.
Nearly 30 per cent of global oil and a third of the world's LNG (liquefied natural gas) passes through the Strait daily and its closure would immediately reduce global supplies triggering a spike in prices, they said.
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India, which imports over 60% of its crude oil from the Gulf, is particularly exposed. A disruption at Hormuz could:
*Spike fuel prices domestically, impacting inflation and household spending.
*Increase shipping and insurance costs for rerouted crude and LNG.
*Delay imports from major suppliers like Qatar, Iraq, and the UAE.
*Disrupt bilateral trade with Middle East partners, especially in sectors like chemicals, fertilisers, and heavy industry.
*India's strategic oil reserves could cushion the blow temporarily, but prolonged disruption would pressure the economy and force urgent diplomatic manoeuvring.
The shutting down of the narrow passage would have significant global repercussions across energy markets and it will impact India's energy security as well, Dr Laxman Kumar Behera, Associate Professor at Special Centre for National Security Studies at the Jawaharlal Nehru University told PTI. Behera said any disruption in the critical shipping lane, which is a geopolitical flashpoint, will majorly impact India's crude oil import from Iraq and to an extent from Saudi Arabia.
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Could Iran withstand the fallout?
While Tehran may use the Hormuz threat as strategic leverage, analysts warn that closing the strait could backfire on Iran itself. Much of Iran's own oil exports—official or under-the-radar—transit through Hormuz. Cutting off this revenue stream, especially amid sanctions, would damage its already fragile economy.
Moreover, a blockade would likely provoke military retaliation from the U.S. and its allies. Even countries like China, which continue to buy Iranian oil, may oppose such a move, leaving Iran further isolated.
What's next?
US Secretary of State Marco Rubio called on China to pressure Tehran against escalation, warning that closing the strait would be 'economic suicide' for Iran. He added that the U.S. and its allies are prepared to respond if the closure goes ahead.
With military tensions flaring and energy markets on edge, the coming days could determine whether this crisis remains a geopolitical standoff—or spirals into a global oil shock with far-reaching consequences for India and the world.