The Strait of Hormuz, just 21 miles wide at its narrowest, is one of the most strategically critical maritime chokepoints in the world. With only two-mile-wide shipping lanes, this narrow waterway connects the oil-rich Persian Gulf to the open ocean, making it the sole maritime gateway for Gulf countries. Around 20% of the world’s oil supply (about 20 million barrels for every day) and 20-30% of LNG supplies globally travel through this route every year. Oil and gas-exporting countries (including Saudi Arabia, Iraq, Kuwait, UAE, Iran, and Qatar) will rely heavily on this corridor to get to Asia, Europe, and Africa. The Strait also handles movement of petrochemicals and fertilizers which are essential to various global industries. Following Iran’s announcement stating on June 22, 2025 that the Strait would be shut down, the Strait is further grappling with its strategic role in the world for oil shipping, along with Iran’s follow up ceasefire declaration.
Iran’s Threat in 2025: A Geopolitical Move
Following U.S. airstrikes on Iranian nuclear infrastructure in June, 2025, the Government of Iran issued a politically sensitive statement indicating how to potentially close the Strait of Hormuz. Iran’s Parliamentary voted to support the blockade (referred to as retaliation against U.S.-Israeli aggression against Iran). Iran’s Supreme National Security Council would ultimately decide whether to blockade, the threat indicated Iran’s traditional utilization of the Strait for political leverage. These threats have two functions. Internationally, they communicate Iran’s ability to conduct economic disruption, while simultaneously warding off further sanctions or military action. Domestically, if hardliners can rally public support against foreign aggressors, this will show strength. However, Iran has never actually closed the strait despite its almost daily threats. The economic impact of actually doing so would be enormous.
Iran’s Dilemma: Power vs. Risk
Iran’s strategic positioning along the northern coast of the Strait with naval assets at Bandar Abbas and Bushehr, gives it the capability to disrupt maritime traffic via mines, fast-attack boats, and missiles. Still, Iran exports about 85% of its crude oil through the same route, mostly from Kharg Island. Its biggest customer, China, receives nearly half of its seaborne crude via the Strait. Thus, any blockade would hurt Iran’s economy deeply, risking the loss of critical revenues and straining ties with allies like China. Additionally, it would invite potential military retaliation from the U.S. Fifth Fleet, stationed in Bahrain, and could unravel recent regional diplomacy, including fragile detentes with Saudi Arabia and the UAE.
Global Impacts of a Possible Blockade
A full-scale closure of the Strait would cause immediate and far-reaching consequences. Analysts estimate oil prices could skyrocket to $100 to $150 per barrel, or even hit $400 in extreme scenarios, triggering inflation and supply shocks across the globe. With 27% of global oil trade and 20% of LNG halted, energy-importing nations would face severe shortages. The UAE’s Fujairah pipeline, one of the few alternative routes, lacks the capacity to fully offset this disruption. A prolonged blockade could mirror the 1973 oil crisis, potentially plunging the global economy into recession. Increased insurance premiums and rerouting costs would raise shipping prices, further straining global trade. A regional military escalation could also destabilize the Middle East, drawing in Gulf states, Israel, and Western powers.
Impact on Major Economies
China, importing over 5.4 million barrels daily through the Strait, would face industrial slowdowns and inflation. Japan and South Korea, importing 1.6 and 1.7 million barrels respectively, would confront energy rationing and surging costs. Europe, depending on 15% of its gas from Qatar, would see its energy crisis worsen, especially during winter. Even the United States, though less dependent directly, would experience fuel price spikes above $4 per gallon, driven by global volatility.
India’s Strategic Concerns and Response
For India, the world’s third-largest oil importer, the threat poses a significant security and economic risk. About 40 to 70% of its crude oil, translating to 2 to 2.1 million barrels per day, passes through the Strait, along with 39% of its LNG from Qatar. A mere $10 per barrel price hike could widen India’s trade deficit, fuel domestic inflation, and devalue the rupee. Disruptions in supplies from Iraq, Saudi Arabia, and Kuwait would test India’s energy resilience. Exports to West Asia, reliant on hubs like Dubai and Abu Dhabi, would also suffer from delays and higher logistics costs.
However, India has been proactive. By June 2025, it significantly diversified its oil sources, Russia even surpassed Middle Eastern suppliers. Imports from Nigeria, Brazil, and Guyana are also increasing. India’s Strategic Petroleum Reserves (SPR), currently covering about 9–10 days of imports, offer a temporary cushion, but analysts call for an expansion to at least 30–60 days. Investments in the India-Middle East-Europe Corridor (IMEC), especially in Fujairah port, aim to create an alternative route for West Asian oil. At the same time, India is accelerating its renewable energy goals in solar and wind, aiming to reduce fossil fuel dependency. Diplomatically, India maintains balanced relations with Iran, the U.S., and Gulf nations, enabling it to act as a de-escalating force in the region. Joint naval exercises with the U.S. and Gulf states enhance maritime security coordination, ensuring freedom of navigation.
Conclusion
India’s response to the Strait of Hormuz crisis highlights its emergence as a resilient and strategic power. While heavily reliant on energy imports through this chokepoint, India has proactively diversified its sources, most notably boosting oil trade with Russia, which surpassed traditional Gulf suppliers by mid 2025. Alongside expanding strategic petroleum reserves and investing in alternate corridors like the IMEC, India’s energy security posture has grown stronger. Its balanced diplomacy with Iran, the US, and Gulf nations, combined with a growing naval presence, positions India not just as a protected stakeholder but as a responsible regional stabilizer ready to navigate future disruptions.
Frequently Asked Questions (FAQs)
Why is the Strait of Hormuz so important globally?
It carries 20% of the world’s oil and 20–30% of LNG, making it a vital chokepoint for global energy supplies.
How would a blockade affect major economies?
Oil prices could soar, causing inflation, energy shortages, and economic slowdowns in China, Japan, Europe, and India.
How is India preparing for such disruptions?
India diversified oil imports, expanded reserves, invested in IMEC, and strengthened diplomacy to mitigate strategic risks.
