Middle East Conflict: Major global oil crisis looms as Iran blocks shipping through Strait of Hormuz

Tehran: Reports of Iran closing the Strait of Hormuz, the world's most important oil transportation route, have raised global concern. UK Maritime Trade Operations (UKMTO) said in a statement that it had received information that the Strait of Hormuz had been closed. According to Reuters, an official with the European Union's naval mission, Aspides, said that ships operating in the region were receiving Very High Frequency (VHF) radio messages from Iran's Revolutionary Guards, warning them not to transit the Strait of Hormuz.

What is happening at Strait of Hormuz?

However, the official clarified that Tehran had not formally confirmed any such order. The Strait of Hormuz is considered the world's most important oil chokepoint. It connects major oil-producing Gulf countries like Saudi Arabia, Iran, Iraq, and the UAE to the Gulf of Oman and the Arabian Sea. Iran has previously warned that it could close this narrow waterway if attacked. This development comes after the US and Israel attacked several targets in Iran on Saturday.

In response, Iran launched missile attacks on US military bases in Israel and Gulf countries. US President Donald Trump stated that the military operation was carried out to eliminate threats to US security and prevent Iran from acquiring nuclear weapons. Iran has declared these attacks illegal. According to Iran's state-run TV Al-Alam, Supreme Leader Ali Khamenei may address the nation after the US and Israeli strikes.

What has Iran's Revolutionary Guards said?

Meanwhile, Islamic Revolutionary Guards commander Ibrahim Jabbari has warned the US and Israel that Iran has so far only used its "junk missiles" and will respond with more dangerous missiles. Meanwhile, reports of explosions have also been reported in several oil-producing Gulf countries. These countries have claimed that their air defense systems intercepted missiles fired by Iran. Escalating tensions over the Strait of Hormuz could have a profound impact on global energy markets and maritime trade.

Why is the Strait of Hormuz important?

It is one of the world's most important and strategic straits. It connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. Iran lies to the north of the Strait of Hormuz, and Oman (Musandam Peninsula) and the United Arab Emirates (UAE) lie to the south. At its narrowest point, the strait is approximately 33–39 kilometers (about 21 miles) wide. It is the world's largest oil chokepoint. In recent years (2023–2025), approximately 25% of the world's seaborne oil trade and 20% of liquefied natural gas (LNG) will pass through the Strait of Hormuz.

Countries like Saudi Arabia, Iraq, UAE, Kuwait, Qatar, and Iran export most of their oil through this waterway. If this waterway is completely closed, global oil prices could skyrocket. It is a major weapon for Iran, but Iran's own oil exports also flow through this waterway, so keeping it closed for a long time could be difficult. The closure of the Strait of Hormuz could also impact countries like India, as oil imports and exports from Gulf countries will be affected.

How will it impact India?

India imports a large portion of its crude oil from Gulf countries. Disruption of the Strait of Hormuz will reduce supplies. Since this is a vital waterway for the world, its closure will increase international crude oil prices, potentially leading to higher prices for petrol and diesel. Fuel prices will increase transportation, food, and industrial costs. Rising crude oil import costs will put pressure on the current account deficit. Rising import costs could weaken the rupee. Using alternative routes will increase shipping costs and impact trade. India could utilize its strategic petroleum reserves in an emergency, but a prolonged closure of this route would increase risks. A prolonged closure of the Strait of Hormuz could pose a serious challenge to India's energy security, inflation, and economic stability.