Global markets on edge as Strait of Hormuz disruption looms amid Iran strikes

Amid the escalating military strikes on Iran by the United States and Israel, and Tehran’s retaliation across the Gulf, global attention is focused on the Strait of Hormuz.

Though just 33 km wide at its narrowest point, this narrow passage wields outsized influence over the world’s economy. Here’s why the strait matters and what the current crisis could mean, especially for India.

What is the Strait of Hormuz?

The Strait of Hormuz is a vital maritime corridor linking the Persian Gulf to the Gulf of Oman, and from there to the Arabian Sea and Indian Ocean. Iran borders it to the north, while Oman and the UAE form its southern edge. Its narrow design—two 2-mile traffic lanes separated by a 2-mile buffer—places it entirely within reach of Iranian military capabilities.

All major Gulf oil exporters—including Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, Bahrain, and Iran itself—must route crude through this single chokepoint. There is no canal, pipeline, or overland alternative capable of handling the same volume, making the strait irreplaceable for global oil shipments.

Global energy chokepoint

About 20 million barrels of crude oil—nearly one-fifth of global consumption—pass through the Strait of Hormuz daily. It also carries roughly 20% of the world’s LNG supply, largely from Qatar, along with refined petroleum products. At any given moment, dozens of supertankers navigate its waters.

Limited alternatives

• Saudi Arabia’s East-West Pipeline delivers 5–7 million barrels per day to the Red Sea.
• The UAE’s Abu Dhabi Crude Oil Pipeline adds roughly 1.5 million barrels per day.
• Together, these pipelines cannot replace the full volume normally flowing through Hormuz.

The Iran factor

Iran controls the northern bank and maintains a strong naval presence, including anti-ship missiles, drones, and sea mines. Tehran has previously threatened to close the strait during crises, including over US sanctions. Even the suggestion of disruption causes oil prices to spike 20–40% in the short term.

Impact on India

India relies almost entirely on seaborne crude, with Gulf oil making up the bulk of imports. Key suppliers—Iraq, Saudi Arabia, and the UAE—route over a million barrels per day through Hormuz.

Crude oil accounts for around 85% of India’s total imports, making it the world’s third-largest consumer. India holds 9.5 million barrels in strategic reserves (about 9–10 days) and commercial reserves of roughly 74–75 days—still below the International Energy Agency’s recommendation of 90 days. Any disruption in Hormuz could severely strain this balance.

Dual threats

Non-Gulf imports from the US and Venezuela pass via the Red Sea through the Suez Canal, which faces threats from Houthi actions.

About 90 lakh Indians live in Gulf countries, putting both remittances and lives at risk amid regional escalation.

Strategic and historical significance

The Strait of Hormuz has long been a geopolitical flashpoint. During the Iraq-Iran War of the 1980s, the “Tanker War” targeted vessels navigating the strait. Today’s crisis represents the most serious escalation in the region since the 1991 Gulf War.

In essence, the Strait of Hormuz is not just a narrow waterway—it is a critical economic lifeline. Any further escalation could disrupt global oil, LNG, and trade flows, sending shocks across the world economy.