Amid coordinated attacks on Iran by the US and Israel and Tehran’s retaliatory actions across the Gulf, all eyes are on the Strait of Hormuz – at just 33 km at its narrowest, no other waterway wields such a large influence on the global economy.
This explainer explains what the Strait of Hormuz is, why it matters, and what the attack on Iran by Israel and the US means for the global economy—especially India.
What is the Strait of Hormuz?
The Strait of Hormuz is a narrow sea route connecting the Persian Gulf to the Gulf of Oman and beyond to the Arabian Sea and the Indian Ocean. It is bordered by Iran to the north and Oman and the United Arab Emirates to the south. The shipping lanes are remarkably thin – two two-mile traffic lanes separated by a two-mile buffer zone – all within reach of Iranian shores.
Every major oil-producing country in the Persian Gulf—Saudi Arabia, Iraq, Kuwait, the United Arab Emirates, Qatar, Bahrain and Iran—will have to route its exports through this single route. There is no underground option, no bypass canal, no pipeline.
Essentially, the Strait of Hormuz is irreplaceable for crude oil.
Why is the Strait of Hormuz the world’s energy chokepoint?
According to US Energy Information, about 20 million barrels of crude oil – or one-fifth of global consumption – passes through the Strait of Hormuz every day. The waterway also carries about 20% of the world’s LNG supply, most of which comes from Qatar, the world’s largest exporter. Then there are petroleum products and refined fuels. At any given time, dozens of supertankers are in transit.
- No realistic option: Saudi Arabia’s East-West Pipeline – a 1,200-kilometre-long infrastructure meant to bypass the Strait of Hormuz – carries 5-7 million barrels per day to the Red Sea. The UAE’s Abu Dhabi crude oil pipeline adds about 1.5 million barrels per day. Combined, they generally do not make up half of the transit through Hormuz.
- Iran Factor: Iran’s coastline forms the entire northern coast of the Strait of Hormuz. Tehran maintains a formidable naval fleet here, which includes anti-ship missiles, drones and sea mines. Tehran has threatened to close Hormuz in the past amid crises – notably over US nuclear sanctions. The waterway was open at the time of this author’s writing.
While oil markets are closed today, any threat to the Strait of Hormuz causes crude oil prices to rise 20-40% in the short term.
Strait of Hormuz and India
Unlike Europe or China, which have pipeline networks, India is almost entirely dependent on seaborne crude. Its onshore refineries – including the world’s largest, operated by Reliance Industries Ltd in Jamnagar, Gujarat, are designed for Gulf oil grades. Iraq is India’s largest supplier after Saudi Arabia and the United Arab Emirates, with more than one million barrels coming through Hormuz.
What is worth noting here is that crude oil constitutes about 85% of India’s total imports, making it almost the third largest consumer in the world. New Delhi has had to give up cheap Russian crude for a trade deal with the US, but the way to Venezuela has opened.
- India’s strategic reserves are low: New Delhi has 9.5 million barrels of strategic reserves – enough for 9-10 days. This, when combined with commercial reserves of 74–75 days, is still less than the International Energy Agency’s recommendation of 90 days. Any disruption in the Strait of Hormuz due to Iran’s ongoing attacks could disrupt this delicate balance.
- Double threat – Hormuz and the Red Sea: India’s crude oil imports from non-Gulf sources, including the US and Venezuela, are routed through the Red Sea via the Suez Canal. With the Houthis threatening to block that channel, the difficult situation has worsened for India.
- Remittances and Diaspora: Nearly 9 million Indians live and work across the Gulf. With Tehran’s retaliation spreading to Dubai and Abu Dhabi and even Bahrain, remittances to India have come under grave threat – as well as the lives of millions of people.
Read this also What’s at stake for crude as Israel, US strike Iran
Of course, the strategic importance of the Strait of Hormuz is nothing new. The Iraq–Iran War of the 1980s was called the Tanker War because both countries attacked oil ships in the vicinity. Today’s crisis is the most serious escalation since the 1991 Gulf War.
The Strait of Hormuz, clearly, is not just a geographical feature – but a geopolitical and economic flashpoint. Any further increase could block the world of its 21-mile pipeline.
