Trait of Hormuz at Risk: How Iran’s Threat Could Disrupt Global Oil

In a move that could redefine global energy dynamics, Iran’s Parliament has approved legislation to authorize the closure of the Strait of Hormuz, a critical oil transit route. While the final decision rests with Iran’s Supreme National Security Council, tensions are escalating quickly following recent US airstrikes on Iranian military sites.

Here’s what this potential blockade could mean for India, Iran, and the global economy, broken down into four key points.

1. What Is the Strait of Hormuz and Why Is It Critical?

The Strait of Hormuz is a narrow but vital passage linking the Persian Gulf to the Gulf of Oman and the Arabian Sea. It’s bordered by Iran to the north and Oman and the UAE to the south. This maritime chokepoint is crucial for energy exports from major oil-producing nations such as Saudi Arabia, Iraq, Kuwait, Qatar, and Iran itself.

Despite being only 33 kilometers wide at its narrowest point, the strait facilitates the passage of nearly 20 million barrels of crude oil per day. That’s about one-fifth of global oil consumption. Additionally, a significant share of the world’s liquefied natural gas (LNG), particularly from Qatar, flows through this narrow waterway.

Its geography makes it incredibly strategic—and dangerously easy to disrupt.

2. Why Would Iran Consider Closing It?

Iran’s threat to block the strait isn’t new, but recent developments have added urgency. After multiple US airstrikes on Iranian facilities, Iran’s leadership is under pressure to retaliate—militarily or economically. Blocking the Strait of Hormuz would be a bold signal, effectively weaponizing oil flows.

For Iran, closing the strait could serve two purposes:

• Retaliation against the U.S. and its allies
• Leverage in nuclear talks and regional geopolitics

However, doing so would also carry massive risks for Iran, including potential military retaliation, international sanctions, and damage to its already fragile economy.

3. What Would Be the Impact on India and the Global Economy?

India imports more than 85% of its crude oil, and a significant portion comes from the Gulf region via the Strait of Hormuz. If the strait is blocked or threatened, India could face:

• Sharp spikes in fuel prices

• Rising inflation across goods and services

• Higher freight and shipping insurance costs

• Pressure on the rupee and fiscal deficit

Globally, oil prices could surge beyond $120 per barrel, depending on the scale and duration of the disruption. Industries reliant on oil and gas—transport, aviation, plastics, manufacturing—would face cascading costs. Countries with high import dependence would be particularly vulnerable.

4. Are There Alternatives? Not Really.

Some Gulf countries have built overland pipelines to bypass the strait. For example:

• Saudi Arabia operates a major east-west pipeline to the Red Sea
• The UAE has a pipeline to Fujairah on the Gulf of Oman

But combined, these pipelines handle less than half of the daily oil volume that currently transits Hormuz. In short, there is no true substitute for the strait in the short term.

While major powers hold strategic oil reserves to cushion immediate shocks, sustained disruption would trigger broader economic instability. Supply chains could face delays, global inflation could rise, and energy-dependent economies would struggle to cope.

Conclusion

Iran’s threat to block the Strait of Hormuz is more than just political posturing—it’s a real, high-stakes gamble that could destabilize global energy markets. For countries like India, which depend heavily on Gulf oil, the consequences could be severe and immediate.

As diplomatic tensions rise, the world watches closely. Whether Iran follows through on this move will shape not just regional politics, but the global economy for months to come.