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Fibre2Fashion
8 hours ago
- Business
- Fibre2Fashion
Iranian Parliament clears Strait of Hormuz closure after US strikes
Iran's Parliament has unanimously approved a proposal to close the Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman and the Arabian Sea and is a vital oil transit route. The final decision now rests with the country's Supreme National Security Council. This move followed a recent US strike on Iranian nuclear facilities. Israel had earlier attacked its nuclear facilities as well. Iran's Parliament has approved a proposal to close the Strait of Hormuz, a vital oil transit route. The final decision now rests with the Supreme National Security Council. This move followed a recent US strike on Iranian nuclear facilities. Meanwhile, the US has urged China to prevent Iran from closing the strait. India has reassured its public that it is prepared for short-term disruptions. Iran has threatened to retaliate. Foreign Minister Seyed Abbas Aragchi said that 'a variety of options" are available, and the country would defend itself through all necessary means. Around 20 million barrels of oil—nearly a fifth of global daily supply—and significant quantities of liquefied natural gas pass through the Strait of Hormuz. A full or partial closure of the strait would disrupt global supply chains and raise shipping costs and insurance premia. Meanwhile, US Secretary of State Marco Rubio has urged China to prevent Iran from closing the strait. Condemning the Iranian move as 'economic suicide', he warned that closing the strait would provoke a strong American and allied military response, global newswires reported. India imports nearly nine-tenths of its crude oil requirements. Of this, about 2 million barrels per day out of 5.5 million transits through the Strait of Hormuz. The Indian government has reassured its public that it is prepared for short-term disruptions. Petroleum Minister Hardeep Singh Puri said India's oil marketing companies have sufficient reserves and continue to receive supplies through multiple routes. 'A large volume of our supplies do not come through the Strait of Hormuz now,' he posted on X. Fibre2Fashion News Desk (DS)
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Business Standard
9 hours ago
- Business
- Business Standard
Iran to block Strait of Hormuz: What it means for India and oil trade
Iran's Parliament approved a proposal to close the Strait of Hormuz, state-owned Press TV reported on Sunday, June 22. The final decision now rests with the Supreme National Security Council. This move follows a US strike on Iranian nuclear facilities, marking Washington's official entry into the ongoing Iran-Israel conflict. While the strikes were limited to infrastructure and reportedly caused no radioactive contamination, they have heightened tensions in West Asia and increased volatility in global energy markets. Iran has threatened retaliation, including possible attacks on US military installations in the Gulf. The threat to block the Strait of Hormuz, a vital oil transit route, has grown more credible. Asked about the Strait, Iran's Foreign Minister Seyed Abbas Aragchi said that 'a variety of options" are available with Iran, adding that the country would defend itself by all means necessary. Speaking at the United Nations Human Rights Council (UNHRC) on June 20, Aragchi said, 'Our peaceful nuclear facilities have also been targeted despite their being under full monitoring of the IAEA'. He added, 'Israel attacks on nuclear facilities are grave war crimes, given also the danger of environmental and health catastrophe as the result of radiological leakage.' What is the Strait of Hormuz, and its role in oil trade? The Strait of Hormuz connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. At its narrowest, it is 33 km wide, with only 3 km allocated to each shipping direction. Around 20 million barrels of oil, which accounts for nearly one-fifth of global daily supply, and significant quantities of liquefied natural gas pass through it. According to the US Energy Information Administration (EIA), flows through the Strait accounted for more than one-quarter of global seaborne oil trade and one-fifth of oil and petroleum product consumption in 2024 and early 2025, making it central to global energy trade. ALSO READ | Donald Are there alternatives to the Strait? Saudi Arabia and the UAE have developed limited overland pipeline alternatives, but these cover less than half of Hormuz's capacity. A full or partial closure would disrupt global supply chains and drive up shipping costs and insurance premiums. Market reacts: Crude surges, gold gains Brent crude rose over 10 per cent to $77 a barrel following the US strikes. Market analysts expect prices could rise further, potentially reaching $83 or even $90 if the Strait is closed. The spread between Brent and WTI crude has also widened. The escalation is expected to cause major disruptions in crude oil supply, with global benchmarks reacting accordingly. Gold, often seen as a safe-haven asset during periods of heightened geopolitical risk, has rebounded over 2 per cent and may approach previous record highs around $3,500 an ounce, as earlier reported by Business Standard. Silver, which has significant industrial applications, may not see similar gains. Rising energy costs could dampen industrial activity, weakening demand for silver and affecting its price trajectory. Why did the US attack Iran? According to US officials, the strikes were intended as a strategic warning aimed at reviving negotiations with Tehran. However, Iran has continued its missile attacks on Israel and has shown no indication of stepping back from confrontation. Following Iran's call for closing the Strait of Hormuz, US Secretary of State Marco Rubio urged China to use its influence with Tehran, calling any attempt to close the Strait 'economic suicide'. Speaking to Fox News, Rubio said, "I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil." India shielded, but not immune India imports nearly 90 per cent of its crude oil requirements. About two million barrels per day of this, out of 5.5 million, transits through the Strait of Hormuz. On Sunday evening, the government reassured the public that it is prepared for short-term disruptions. Oil Minister Hardeep Singh Puri stated that India's oil marketing companies have sufficient reserves and continue to receive supplies through multiple routes. 'A large volume of our supplies do not come through the Strait of Hormuz now,' he posted on X. Over the past few years, India has diversified its sources. Russian crude, which bypasses the Strait entirely, has grown to form about 38 per cent of India's imports by May 2025, up from under 1 per cent in early 2022. However, diversification has its limits. Domestic crude prices remain closely aligned with global benchmarks, and oil continues to account for a significant portion, 15 to 25 per cent, of India's monthly import bill. The impact of price shocks extends beyond trade. The current account deficit nearly doubled to 1.3 per cent of GDP in FY25, up from 0.7 per cent the previous year, driven largely by higher import costs and weakening external demand. If the West Asia crisis deepens, the outlook for growth could weaken further. Past episodes have shown how quickly global disruptions can derail GDP projections, especially when supply chains are affected or exports slow. While India's energy planning has improved resilience, sustained instability in the region could still stoke inflation, pressure the rupee, and erode fiscal space, limiting the government's ability to cushion the economy through subsidies or spending. Beyond energy: What Strait closure mean for Iran-Israel conflict The crisis is not limited to oil. With the US now militarily involved, analysts warn that the conflict may weigh on global economic growth. Prolonged uncertainty can make macroeconomic forecasting unreliable, even for institutions like the International Monetary Fund. Iran has never blocked the Strait of Hormuz, even during intense conflicts, marking a significant shift in Iran's strategy and escalation in the conflict. Iran had previously warned the US and other European nations from interfering, and it seems the country has no intention of backing down now.
Hans India
13 hours ago
- Business
- Hans India
Iran mulls to block Strait of Hormuz
New Delhi: Iran's Parliament has approved the closing of the Strait of Hormuz, though the final decision will be taken by the Supreme National Security Council. After the US struck three Iranian military sites, all eyes are now on Iran's potential retaliation. In the range of options Iran has, possibly the most discussed is the threat to block the Strait of Hormuz. So far, most experts had agreed that Iran would not go that far. America's actions on Sunday seemed to have changed that. Iran's Foreign Minister Seyed Abbas Aragchi, when asked by reporters about Hormuz, said simply that 'a variety of options are available with Iran'. The Strait, a vital chokepoint for global oil shipments, handles nearly a fifth of the world's petroleum trade. It handles around 20 million barrels of crude oil per day — nearly one-fifth of global daily consumption. A closure would cripple oil exports from key Gulf producers, including Saudi Arabia, Iraq, the UAE, and Kuwait. While some alternate pipelines exist, they can only handle a small share — roughly 2.6 million barrels per day. Qatar's liquefied natural gas (LNG) exports, vital to Asia and Europe, would also be disrupted. A global oil shock would ripple across economies already grappling with inflation. Energy costs would spike, supply chains would slow, and shipping insurers are already pricing in new war-risk premiums. Economists warn a sustained disruption could slash global GDP by 1–2%, raising the risk of a worldwide recession. India, which imports 90% of its crude — with over 40% coming through Hormuz — is especially vulnerable. A cut-off would affect refinery operations, trade balances, and drive inflation through soaring fuel prices. The rupee would likely come under pressure, and the government may be forced to dip into its 74-day oil reserves. Major General Kowsari, a member of the parliament's National Security Committee, confirmed the development, stating that the proposal reflects national sentiment but awaits the green light from the country's highest decision-making body on security matters. The escalation comes amid rising tensions following Israel's ongoing military operations against Iran-linked targets and a deadly regional standoff.
Indian Express
a day ago
- Politics
- Indian Express
Iran's security council to decide on Strait of Hormuz closure after parliament backs move
Iran's Supreme National Security Council will decide whether to close the Strait of Hormuz after the country's parliament approved the step, Reuters reported , citing Iran's state media Press TV. The closure of the strait, a vital waterway for global oil and gas shipments, is not yet final. Around 20 per cent of the world's oil and gas moves through the Strait of Hormuz. As per Reuters report, Iranian lawmaker and Revolutionary Guards commander Esmail Kosari told the Young Journalist Club on Sunday that closing the strait is 'on the agenda' and 'will be done whenever necessary.' The move follows US strikes on three Iranian military sites. Iran's foreign minister Seyed Abbas Aragchi said, as quoted by Reuters, that 'a variety of options are available with Iran.'
Indian Express
a day ago
- Business
- Indian Express
Iran moves to block Strait of Hormuz: What this will mean for India, Tehran, world, in 4 points
Iran's Parliament has approved the closing of the Strait of Hormuz, though the final decision will be taken by the Supreme National Security Council, Iran's Press TV reported on Sunday (June 22). After the US struck three Iranian military sites, all eyes are now on Iran's potential retaliation. In the range of options Iran has, possibly the most discussed is the threat to block the Strait of Hormuz. So far, most experts had agreed that Iran would not go that far. America's actions on Sunday seemed to have changed that. Iran's foreign minister Seyed Abbas Aragchi, when asked by reporters about Hormuz, said simply that 'a variety of options are available with Iran'. What makes blocking the Strait of Hormuz such a potent threat? We break down the history, geography and economics, in four points. A strait is a narrow water body connecting two larger bodies of water. The two water bodies that the Strait of Hormuz connects are the Persian Gulf and the Gulf of Oman, which further flows out into the Arabian Sea. Thus, countries around the Persian Gulf like Iran, Saudi Arabia, and UAE, which happen to be major oil producers, depend upon the Strait of Hormuz to access the open seas. The Strait is in the territorial waters of Iran and Oman, and accounts for a big bulk of the world's oil trade. The Strait is not very wide. It is just 33 km at its narrowest point, while the width of the shipping lane in the to and fro direction is only 3 km. This makes it easy to block the Strait, or attack the ships passing through. Oil. According to the US Energy Information Administration (EIA), 'Flows through the Strait of Hormuz in 2024 and the first quarter of 2025 made up more than one-quarter of total global seaborne oil trade and about one-fifth of global oil and petroleum product consumption. In addition, around one-fifth of global liquefied natural gas trade also transited the Strait of Hormuz in 2024, primarily from Qatar.' Because of its geographic location, there is no sea route alternative to the Strait of Hormuz. So if the passage of ships through the strait were to be disrupted, it would have ramifications for oil and LNG trade worldwide, and prices would shoot up. Any fluctuation in oil prices has a trickle-down effect on the prices of many other goods and commodities. The alternatives to the Strait of Hormuz involve transporting oil overland to ports on the Red Sea or on the Gulf of Oman. The EIA states that Saudi Arabia's Aramco 'operates the 5 million barrels per day East-West crude oil pipeline, which runs from the Abqaiq oil processing centre near the Persian Gulf to the Yanbu port on the Red Sea', while the UAE operates a '1.8 million-b/d pipeline linking onshore oil fields to the Fujairah export terminal in the Gulf of Oman.' For comparison, the flow through the Strait of Hormuz in 2024 was 20 million barrels per day. Also, if a danger is perceived in the Strait of Hormuz region, insurances and security measures will go up, making shipping more expensive for all parties involved. Blocking or disrupting the Strait of Hormuz can mean laying mines in the sea, attacking passing ships with missiles and bombs, detaining ships, or carrying out cyberattacks on the vessels. Iran has never blocked the Strait, amid any war or conflict. In the 1980s, during the Iran-Iraq war, both nations attacked ships passing through the strait, but did not stop traffic. This is because Iran depends on the strait for its own trade too, and disrupting it will hurt both itself and its friends. Iran's neighbours, including the powerful Saudi Arabia, are slowly improving ties with it, and Tehran would not want to alienate them. Also, because of Western sanctions, Iran has few customers for its oil, which China thus buys in bulk at heavy discounts. A disruption in the strait will disrupt Iran ally China's energy needs. A major factor staying Iran's hand so far had been that disturbing global trade would be one sure way to get the US directly involved militarily. But since the US has now already involved itself militarily, this deterrence is to a degree spent. The US has its 5th Fleet stationed in Bahrain, and can respond quickly to Iran's activities in the region. However, by the time ship movement is restored to normal, much chaos would already have been caused. The EIA estimates '84% of the crude oil and condensate and 83% of the liquefied natural gas that moved through the Strait of Hormuz went to Asian markets in 2024. China, India, Japan, and South Korea were the top destinations for crude oil moving through the Strait of Hormuz to Asia, accounting for a combined 69% of all Hormuz crude oil and condensate flows in 2024.' So, India will be affected. India also buys oil from Russia, the US, Africa, and Latin America, so it is not that it won't be able to get enough oil and gas. The problem will be about the price fluctuation. Also, because China buys much of its oil from Iran, a long disruption here could face Beijing to turn to other sellers, further complicating the price question.
