Strait of Hormuz: Iran's Trump card against US could be India's pain point

Iran’s parliament has approved a measure to close the Strait of Hormuz, a critical artery for global oil trade, in retaliation for US President Donald Trump's airstrikes on its nuclear facilities, escalating tensions in the Gulf and raising fears of disruptions to energy supplies.

Strait of Hormuz

The Strait of Hormuz, a narrow waterway between Iran and Oman, connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. At its narrowest point, it spans 21 miles (33 km), with shipping lanes just 2 miles wide in each direction, making it a vulnerable chokepoint for maritime traffic.

The strait is deep enough to accommodate the world’s largest oil tankers, facilitating the transport of crude oil, liquefied natural gas (LNG), and other goods.

Importance: Countries using strait

The strait is the world’s most critical oil transit route, handling roughly 20% of global oil consumption—approximately 17-20 million barrels per day—and a third of global LNG shipments. Major oil exporters, including Saudi Arabia, Iraq, the United Arab Emirates (UAE), Kuwait, and Qatar, rely on the Strait to ship their crude and gas to international markets. About 82% of the oil passing through the Strait in 2022 was destined for Asia, with India, China, Japan, and South Korea accounting for 67% of the flows.

The US and Europe import smaller volumes too, with the Americans receiving around 2 million barrels daily.

Beyond energy, the strait is a vital passage for global trade, including raw materials and consumer goods.

Can Iran close the strait?

Iran’s ability to close the strait is feasible but challenging. Its navy and Islamic Revolutionary Guard Corps (IRGC) could deploy mines, missiles or fast-attack boats to disrupt shipping, as seen during the 1980s “Tanker Wars.” However, a full blockade would require sustained military action, risking confrontation with the US Fifth Fleet and other Western navies patrolling the region.

Iran’s parliament has endorsed closure, but the final decision rests with the Supreme National Security Council or Supreme Leader Ayatollah Khamenei. Analysts note that closing the Strait would also halt Iran’s own oil exports, which constitute 85% of its shipments through the Strait, making it a self-damaging move.

China, Iran’s largest oil buyer, may exert economic pressure to prevent a closure.

Impact on oil trade and prices

A closure of the strait would severely disrupt global energy markets, halting exports from key Gulf producers. The US Energy Information Administration (EIA) estimates that the Strait accounts for over a quarter of global seaborne oil trade. A blockade could drive oil prices to $80-$100 per barrel, with some Iranian state media claiming spikes as high as $400.

Supply shortages would hit Asia hardest, particularly in India, China, and Japan, while Europe could face disruptions to its LNG supply. Freight rates and insurance costs would soar, further inflating energy prices.

Saudi Arabia and the UAE have limited pipeline alternatives, covering less than half of Hormuz’s capacity, which is insufficient to offset a prolonged closure.

Gulf countries opposing closure

Saudi Arabia, the UAE, Kuwait and Qatar, major oil and gas exporters, would strongly oppose any move to close the Strait, as it would cripple their economies. These Gulf Cooperation Council (GCC) states have criticised Israeli actions in the region but would likely align against Iran to protect their energy exports.

Oman, which shares control of the strait’s southern half, would also resist closure to maintain regional stability and its neutral stance. A blockade could draw these countries into a broader conflict to safeguard their interests.

Impact on India

India, the world’s third-largest oil importer, relies on the strait for about 40% of its 5.5 million barrels per day of crude imports, primarily from Iraq, Saudi Arabia and the UAE. A closure would disrupt 1.5-2 million barrels daily, which could raise domestic fuel prices, inflating import costs and stoking inflation.

However, India has mitigated risks by diversifying its oil sources, with Russian crude imports reaching 2.2 million barrels per day in June 2025, bypassing the strait via the Suez Canal or Cape of Good Hope.

India’s LNG imports from Qatar, Australia and the US are largely unaffected, as Qatar’s routes avoid the Strait. Petroleum Minister Hardeep Puri emphasised India’s three-week oil reserves and diversified suppliers, including Russia, the US and Brazil, as buffers against disruptions.

Still, experts warn that prolonged closure could strain India’s energy security and economic stability.

In addition to this, there is also the question of the safety of Indian expatriates who work in countries of the Gulf region. An estimated nine million Indians are understood to be spread across these countries. Apart from the fact that their physical well-being is a matter of concern, India also receives $40 billion as remittances from expatriate workers. 

India-Iran relations

India and Iran have historically maintained pragmatic relations, driven by energy and strategic interests. Iran was a key oil supplier to India until US sanctions in 2019 curtailed imports. India has invested in Iran’s Chabahar port to access Afghanistan and Central Asia, bypassing Pakistan, reflecting a shared interest in connectivity.

However, India’s ties with the US and Israel have occasionally strained relations with Tehran. India has balanced its diplomacy, engaging Iran while diversifying energy imports to reduce dependence. Recent tensions in the Gulf have prompted India to monitor developments closely, with New Delhi advocating for de-escalation to protect its energy and trade interests.

While Iran’s threat to close the Strait of Hormuz has rattled global markets, analysts assign a low probability to a full blockade due to its economic cost to Iran and potential for military retaliation. The world awaits the decision of Iran’s Supreme National Security Council, as rising tensions risk destabilising global trade and energy flows. For India, diversified oil sources provide a cushion, but a prolonged crisis could test its economic resilience.