Israel‑Iran Standoff: How Hormuz Disruptions Could Rock India’s Oil Supply

The ongoing tensions between Israel and Iran have once again cast a spotlight on one of the most strategically vital chokepoints in the world — the Strait of Hormuz. As geopolitical unrest continues to ripple across the Middle East, nations that rely heavily on energy imports, particularly India, are closely watching developments in the region.

India, the world’s third-largest oil importer, sources a significant portion of its crude oil through this narrow waterway. Any disruption here can lead to immediate and long-lasting impacts not only on India’s economy but also on global energy markets. The Strait of Hormuz is more than just a passage — it's a lifeline for energy transportation, and its vulnerability is a global concern.

What Is the Strait of Hormuz?

The Strait of Hormuz is a narrow waterway located between the Persian Gulf and the Gulf of Oman. At its narrowest point, it is just about 21 miles wide. On one side lies Iran; on the other, Oman and the United Arab Emirates (UAE). Despite its limited geographical span, the strait holds immense geopolitical and economic importance due to the sheer volume of oil and liquefied natural gas (LNG) that passes through it daily.

It serves as the only sea passage from the oil-rich Persian Gulf to the open ocean. According to global estimates, around 20% of the world’s crude oil passes through the Strait of Hormuz. That amounts to over 18 million barrels per day, carried by giant oil tankers headed for destinations across Asia, Europe, and beyond.

Why Is the Strait So Important for India?

India depends on imported crude to meet over 85% of its oil demand, and a substantial portion of these imports comes from Gulf countries — particularly Iraq, Saudi Arabia, UAE, and Kuwait. These countries load their oil on tankers that pass through the Strait of Hormuz en route to India’s western ports such as Jamnagar, Mumbai, and Mangalore.

Any threat or actual disruption to shipping in the Strait would immediately impact:

• Supply security: Disrupted shipments would strain India's refinery operations and create shortfalls.

• Import costs: Higher risk would push up freight and insurance costs, translating to more expensive crude for Indian refiners.

• Retail fuel prices: These costs would be passed on to consumers in the form of costlier petrol, diesel, and LPG.

• Inflation: Fuel price hikes could spark broader inflationary pressures across the Indian economy.

In essence, the Strait of Hormuz is an invisible thread that ties India’s energy security to the stability of West Asia.

The Israel-Iran Conflict and Regional Volatility

The recent escalation in hostilities between Israel and Iran, whether through direct military actions or proxy warfare, has raised fears that the conflict may spill over into key shipping routes. Iran has, in the past, threatened to block the Strait of Hormuz in response to sanctions or perceived provocations.

Iran’s influence in the Strait is strategic. Not only does it border the waterway, but it also has military bases and naval capacity to disrupt shipping if it chooses. Its control over various regional militias also gives it indirect ways to disrupt maritime flow, such as attacks on oil tankers or drones targeting vessels.

Even the threat of such disruptions tends to push global oil prices upward. Investors and traders react to risk premiums, and energy-importing countries like India feel the pinch almost immediately.

Historical Precedents: When the Strait Was at Risk

The world has witnessed the sensitivity of the Strait of Hormuz several times:

1. 1980s Iran-Iraq War: Both nations targeted each other’s oil tankers in what became known as the "Tanker War." Global prices surged.

2. 2011–2012: Iran threatened to close the Strait in retaliation for Western sanctions. The move was seen as a bargaining tactic but showed Tehran’s leverage.

3. 2019 Attacks: A series of attacks on tankers in the Gulf of Oman (near Hormuz) were blamed on Iranian forces. Insurance rates soared, and several shipping lines temporarily rerouted vessels.

Each of these incidents caused significant spikes in oil prices, rattled global markets, and reinforced how crucial uninterrupted flow through Hormuz is.

India’s Strategic Response

Understanding the stakes, India has adopted multiple strategies to reduce the risks associated with disruptions in the Strait of Hormuz:

1. Strategic Petroleum Reserves (SPR)

India has established strategic oil reserves in underground rock caverns in locations like Vishakhapatnam, Mangaluru, and Padur. These reserves can be tapped during emergencies and currently hold about 5.3 million tonnes of crude — enough to meet 9–10 days of oil demand.

2. Diversification of Suppliers

India has tried to diversify its oil sources, increasing imports from the U.S., Russia, Brazil, and West Africa. While the Gulf still dominates, diversification reduces complete dependency on one route or region.

3. Energy Transition

India is also investing in renewable energy, electric mobility, and alternative fuels to reduce long-term dependence on imported fossil fuels. While these efforts are promising, the shift is gradual, and oil will remain vital in the near term.

4. Diplomatic Channels

India maintains strong diplomatic relationships with both Iran and Gulf countries. It has often walked a fine line in West Asia to preserve access to energy resources while avoiding entanglement in regional rivalries.

Global Energy Markets and Oil Price Volatility

Beyond India, the Strait of Hormuz is a chokepoint for the entire world. Disruption there affects:

• China (another major importer of Gulf oil)

• Europe

• Japan and South Korea

Markets respond almost instantly to any perceived threats in the region. For instance, a missile strike or military build-up near the Strait can cause oil prices to spike overnight by 5%–10%. Since oil is priced globally, even countries not importing via Hormuz feel the ripple effects.

The insurance and freight cost of shipping through the Strait also increases with risk, which adds further pressure on energy bills globally.

Military Presence and International Safeguards

Given the importance of the Strait, several global powers maintain a military presence in and around the Gulf region. The U.S. Navy’s Fifth Fleet is based in Bahrain and routinely patrols the waters to secure freedom of navigation.

European and Asian countries have also occasionally contributed naval assets or supported joint missions to secure maritime routes. These efforts aim to deter attacks and reassure commercial shippers.

However, when a nation like Iran is involved, there is always a risk of escalation. It only takes one miscalculation — a drone, a mine, or a missile — to ignite a regional crisis that could spiral globally.

 A Narrow Strait, A Broad Impact

The Strait of Hormuz, though physically narrow, plays an outsized role in the global energy supply chain. For India, its importance is both economic and strategic. The Israel-Iran conflict threatens to destabilize this vital artery, raising alarms in Delhi and beyond.

While India has taken steps to mitigate its dependence, the current situation underscores how interconnected the world remains — and how one maritime chokepoint can shift the energy, political, and financial equilibrium of entire nations.

In the long run, India’s focus must remain on diversification, domestic energy innovation, and maintaining geopolitical balance in a volatile region. Because, as history shows, the Strait of Hormuz isn’t just a route for oil — it’s a flashpoint that carries the weight of global stability.