India vs the oil choke point: How we're dodging the Strait of Hormuz fallout amid the Israel–Iran war
Military conflict in the Middle East is intensifying. Following US airstrikes on three of Iran's nuclear sites, Tehran has threatened to shut down the Strait of Hormuz—a narrow but essential maritime passage between Iran and Oman that handles about 20 per cent of the world's daily oil consumption.
Iranian lawmaker and Revolutionary Guards Commander Esmail Kosari stated that closure "is on the agenda and will be done whenever necessary." Press TV reported that Iran's Parliament has approved the proposal and the Supreme National Security Council will take the final call.
This has raised alarms globally. Oil tankers are already hesitating to enter the region. Around 50 large tankers are currently navigating out of the strait, according to media reports.
What the Strait of Hormuz means for India
This 33-kilometre-wide passage links the Persian Gulf to the Indian Ocean. India, the world's third-largest oil importer, gets over 40 per cent of its crude and about half its gas from countries whose shipments pass through this strait. That means around 2 million barrels per day of Indian imports move through this bottleneck.
"If Iran closes the Strait of Hormuz, India will definitely suffer," said Robinder Sachdev, a foreign affairs expert, in an interview with ANI. "About 20 per cent of the world's crude oil and 25 per cent of the world's natural gas flow through these."
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For every $10 rise in oil prices, India's GDP takes a hit of 0.5 per cent, he warned.
India's diversification: Why panic may be premature
Despite the Strait's significance, India may not feel the full brunt of its closure. Petroleum Minister Hardeep Singh Puri told NDTV, "We have enough diversified supplies of crude, and even if there were to be a disruption, we can source it from alternative suppliers. I don't think this is something we are unduly worried about."
Russia has become India's top crude supplier, overtaking the Middle East. According to Kpler data, Indian refiners imported 2.1–2.2 million barrels per day (bpd) of Russian oil in June—more than from Iraq, Saudi Arabia, the UAE and Kuwait combined. Imports from the US also rose to 439,000 bpd in June, up from 280,000 bpd in May.
These imports do not rely on the Strait of Hormuz. Russian crude flows via the Suez Canal, Cape of Good Hope, or the Pacific Ocean.
India also draws LNG from Australia, Russia, and the US, and Qatar's LNG for India avoids the strait altogether. That limits gas supply exposure as well.
Market volatility: A real concern
Geopolitical risk is already fuelling
oil price spikes
. Brent crude has jumped to $77 per barrel following Iran's missile retaliation against Israel. Analysts at Goldman Sachs say prices could exceed $90 if tensions escalate. Citigroup estimates prices could reach that mark specifically if the Strait is shut.
"Oil markets remain adequately supplied," said Jain from Yes Securities. He cited OPEC's 4 million bpd spare capacity and US shale oil as stabilising forces.
But not everyone is reassured. Credit agency
ICRA
warned that higher oil prices would erode the profits of Indian state-run retailers like IOC, BPCL and HPCL, which have kept domestic prices steady despite falling global benchmarks.
Strategic backstops in place
India has buffers. It holds strategic reserves covering 9 to 10 days of oil imports. It also exports petroleum products, primarily through private refiners like
Reliance
and Nayara, giving it some flexibility in domestic fuel management.
If needed, the government could limit exports and introduce price subsidies for diesel and LPG to contain inflation.
Could Iran really shut it down? History says no
Iran has threatened to close the strait before but never followed through. During the 1980s Tanker War, the strait remained operational despite missile attacks and naval confrontations.
In 2011 and again in 2019, Iran made similar threats in response to sanctions. Each time, the route stayed open.
Shweta Singh of South Asian University explained why. "It will hurt Iran's friend, China, the world's second-largest economy, and Iran's largest trading partner," she wrote in Mint. China buys nearly 75 per cent of Iran's oil exports.
It would also strain ties with Oman and the Gulf Cooperation Council, and fuel domestic unrest due to inflation. "Any economic hits or closure of its oil exporting terminal will see a surge in prices and fuel popular discontent," Singh added.
Steven Schork of the Schork Group echoed this: "I do not think Iran will close the Strait of Hormuz because it would hurt India and China, two of their biggest oil export clients."
So far, supplies remain intact. However, data from Kpler shows a drop in Middle East tanker activity. The number of empty tankers headed into the Gulf has dropped from 69 to 40. Signals bound for the region from the Gulf of Oman have halved.
"Vessel activity suggests a decline in crude loadings from the Middle East in the coming days," Sumit Ritolia, Lead Research Analyst at Kpler, told PTI.
India will need to watch closely, and adapt fast if the situation worsens. But for now, thanks to a broad and nimble import strategy, it stands more prepared than many.
The Strait of Hormuz may be heating up, but India isn't yet sweating.
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