Imagine a narrow stretch of water so vital that the global economy would tremble if it were blocked. That’s the Strait of Hormuz—a chokepoint nestled between Iran and Oman through which almost 20% of the world’s oil flows every day. This means that every fifth drop of oil that powers cars, planes, and factories worldwide passes through a stretch of water just 21 nautical miles wide. And right now, it’s at the center of a geopolitical storm that could ripple across the globe—including directly into your fuel bill.

Let’s break down what’s happening, why Iran is threatening to block the strait, and how it could impact India and the world. Let’s dive in.

What is the Strait of Hormuz?

The Strait of Hormuz is a narrow waterway connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea. It’s just 33 km wide at its narrowest point, but don’t let that fool you—it’s one of the most important strategic passageways on Earth.

Every day, nearly 20–21 million barrels of oil—roughly one-fifth of the world’s oil consumption—pass through this slender route. It also handles a massive share of the world’s liquefied natural gas (LNG), primarily from Qatar.

Think of it as the “lifeline of energy” for Asia, Europe, and the U.S. Countries like India, China, Japan, and South Korea depend heavily on oil that transits through this strait. For India specifically, over 85% of our oil imports pass through Hormuz.

What’s Happening Now? Why is Iran Threatening to Block It?

Tensions in the Middle East have flared again—this time with serious consequences as Iran and Israel War conflict exxagerates.

In June 2025, following U.S. airstrikes on Iran’s nuclear and military installations, Iran’s parliament passed a bill to block the Strait of Hormuz. The proposal targets ships linked to the U.S., Israel, and their allies. While the final decision rests with Iran’s Supreme National Security Council, the message is loud and clear: Tehran is ready to weaponize its geography.

Why now? Iran is retaliating. The strikes were seen as an act of aggression, and Iran wants to raise the stakes. By threatening one of the world’s most vital trade routes, it’s flexing its geopolitical muscles and sending a signal to the West.

But here’s the twist: blocking the strait could backfire. Iran itself relies on the strait to export oil, particularly to major buyers like China and India.

Strategic Chessboard: Iran’s Motives vs. Risks

Let’s break it down:

Blocking the strait is like holding a gun to your own foot while threatening someone else. It may scare others, but it also hurts you.

Global Impact: Rising Oil Prices & Market Volatility

The markets are already feeling the heat. Following Iran’s parliamentary vote, oil prices have surged. Analysts expect prices could skyrocket to $110–130 per barrel if tensions escalate or actual blockage happens.

Why such a big impact? Because there are no easy alternatives.

There are a few pipelines—like Saudi Arabia’s East-West pipeline or the UAE’s Habshan–Fujairah line—but they can only handle a fraction of the total load. Most of the oil still has to go by sea—through Hormuz.

That’s why the global economy is so vulnerable. A disruption could mean higher transportation costs, inflation, delayed shipments, and even fuel rationing in worst-case scenarios.

What This Means for India?

India is in a tight spot. Being the world’s third-largest oil importer, we’re deeply exposed to any disturbances in the Gulf region. The country imports about 90% of its crude oil, with 40-50% of these imports—roughly 2 million barrels per day—transiting through the strait from suppliers like Iraq, Saudi Arabia, the UAE, and Kuwait (India Today). Additionally, 60% of India’s LNG imports, mainly from Qatar, rely on this route (Business Today).

A closure would spike oil prices, potentially to $80-$100 per barrel or higher, increasing India’s oil import bill by an estimated $14 billion. This would widen the current account deficit and drive inflation, particularly in transportation and energy sectors (Business Today). Higher fuel costs could ripple through the economy, affecting everything from food prices to manufacturing.

To cushion the blow, India is diversifying its oil sources. In June 2025, imports from Russia are projected to hit 2-2.2 million barrels per day, surpassing Middle Eastern imports through the strait (Business Today). India also maintains strategic petroleum reserves to weather short-term disruptions, offering some resilience.

U.S. Response: “Economic Suicide” Warning

The U.S. has warned Iran that closing the strait would be “economic suicide.” Washington has also reiterated its commitment to keeping global waterways open, with its Fifth Fleet stationed in Bahrain ready to act if needed.

In other words, military tension in the Gulf could rise dramatically. A naval standoff—or worse, a miscalculation—could plunge the region into chaos.

What Happens Next?

For now, the strait remains open—but the threat is real, and the world is on edge.

Most experts believe Iran may not go all the way. Completely closing the strait would damage its own economy, worsen international relations, and potentially provoke military retaliation. Instead, Tehran may use selective harassment—like inspections, slowing traffic, or temporary shutdowns—to keep the pressure on without fully crossing the red line.

But even that is enough to keep the oil markets nervous.

What Can India and the World Do?

• Strategic Oil Reserves: India has begun building strategic reserves to hedge against disruptions. But these are still limited in scope.
• Diversifying Energy Sources: Greater investment in renewables and alternative suppliers (e.g., Russia, Latin America, Africa) is crucial.
• Diplomatic Engagement: India must stay engaged with both Western and Gulf powers to maintain neutrality and protect its energy interests.
• Global Coordination: Nations may need to work collectively—perhaps via the UN or G7—to ensure maritime stability and prevent miscalculations.

Final Thoughts

The Strait of Hormuz may be just 33 km wide—but the impact of its closure could stretch across the globe.

For India, the unfolding crisis is a reminder of just how interconnected we are. From the refineries in Gujarat to the fuel pump in your neighbourhood, the ripple effect of a geopolitical flare-up thousands of kilometres away could be felt in every drop of diesel or LPG.

While we can’t control what happens in Tehran or Washington, we can stay informed, push for diplomatic solutions, and plan smarter for energy resilience. Because in today’s world, even a small strait can carry the weight of a global storm.

FAQs (Frequently Asked Questions):

1. What is the Strait of Hormuz and why is it important?
   It's a narrow waterway between Iran and Oman through which 20% of the world’s oil flows. It’s vital for global and especially Asian oil supplies.
2. Why is Iran threatening to block the Strait of Hormuz?
   Iran’s move comes in response to U.S. airstrikes on its facilities. Blocking the strait is seen as a strategic retaliation to pressure global powers.
3. How will the Strait of Hormuz crisis affect India?
   Over 85% of India’s oil imports pass through the strait. Any disruption could lead to soaring fuel prices, inflation, and economic pressure.
4. Is the strait actually blocked right now?
   As of now, the strait is not closed. Iran's parliament has passed a bill, but enforcement depends on its Supreme National Security Council.
5. Can the global oil supply continue without the Strait of Hormuz?
   There are some pipelines, but they don’t have enough capacity to fully replace Hormuz. A closure would lead to significant global supply chain disruption.