Recent escalations between the US and Iran have brought the Strait of Hormuz back into the global spotlight. With Iran's Parliament approving a move to block this critical waterway, the world watches with bated breath, wondering about the potential ramifications. While the final decision rests with Iran's Supreme National Security Council, the mere threat underscores the immense strategic importance of this narrow passage.
What Makes the Strait of Hormuz So Crucial?
The Strait of Hormuz is more than just a body of water; it's a global chokepoint for energy trade. Connecting the Persian Gulf and the Gulf of Oman, which in turn leads to the Arabian Sea, it serves as the primary sea route for major oil producers such as Iran, Saudi Arabia, and the UAE to access the open seas.
Geographically, its significance is amplified by its narrowness. At just 33 km at its tightest point, with shipping lanes only 3 km wide in each direction, it's remarkably easy to disrupt or even block. This inherent vulnerability transforms it into a powerful leverage point in regional and international politics.
The Economic Lifeline: Why the World Depends on Hormuz
The primary reason for the Strait's global significance is its role in oil and gas transportation. According to the US Energy Information Administration (EIA), flows through the Strait in 2024 and early 2025 constituted:
- More than one-quarter of the total global seaborne oil trade.
- About one-fifth of global oil and petroleum product consumption.
- Approximately one-fifth of global liquefied natural gas (LNG) trade is primarily from Qatar.
With no viable sea route alternative, any disruption to this passage would cause oil and LNG prices to skyrocket globally, leading to a ripple effect across various goods and commodities. While some overland pipelines exist as alternatives (like Saudi Arabia's East-West crude oil pipeline or the UAE's pipeline to Fujairah), their capacity is significantly less than the 20 million barrels per day that transited the Strait in 2024. Furthermore, perceived danger in the region would significantly increase insurance and security costs for shipping, making trade inherently more expensive.
The Unprecedented Threat: How Likely is Iran to Act?
Blocking the Strait could involve a range of aggressive actions: laying mines, missile attacks on ships, detentions, or even cyberattacks. Historically, Iran has never fully blocked the Strait, even during the Iran-Iraq war in the 1980s when both sides attacked ships. This restraint stemmed from two crucial factors:
- Self-interest: Iran relies on the Strait for its own trade, and disruption would harm its economy and that of its allies.
- Regional ties: Tehran has been working to improve relations with its neighbours, including Saudi Arabia, and would be hesitant to alienate them.
- Chinese dependence: A significant portion of Iran's oil, bought by China at heavy discounts due to Western sanctions, transits through Hormuz. Disrupting this would directly impact a key ally.
However, the recent US military strikes on Iranian sites have altered the deterrence calculus. Previously, a major factor preventing Iran from such a drastic measure was the fear of direct US military involvement. Now that the US has already acted, Iran's Foreign Minister Seyed Abbas Aragchi ominously stated that "a variety of options are available with Iran." While the US 5th Fleet in Bahrain can respond swiftly, even a temporary disruption could cause significant chaos before normalcy is restored.
India's Stake: Feeling the Economic Jitters
India, like many Asian nations, has a substantial stake in the stability of the Strait of Hormuz. In 2024, the EIA estimated that 84% of crude oil and condensate and 83% of LNG moving through the Strait went to Asian markets. China, India, Japan, and South Korea alone accounted for 69% of all Hormuz crude oil and condensate flows.
While India diversifies its oil sources by importing from Russia, the US, Africa, and Latin America, the primary concern isn't a complete lack of supply but rather the volatility of prices. Any major disruption would lead to significant price fluctuations, impacting India's economy and energy security. Furthermore, if China, a major buyer of Iranian oil, is forced to seek alternative sellers due to a Strait blockade, it could further intensify the global competition for oil, driving prices even higher.
The situation remains fluid, but the implications of Iran potentially blocking the Strait of Hormuz are far-reaching, touching every corner of the global economy.