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Three oil tankers are reportedly on fire in the Gulf of Oman, with conflicting accounts suggesting either a collision or hostile action as the cause. The incident comes at a time of surging regional tensions, particularly between Israel and Iran. It raises fresh alarm over the security of one of the world’s most vital maritime routes. With Iran threatening to close the Strait of Hormuz in retaliation for recent Israeli military strikes, the stakes for global energy markets—and geopolitical stability—are rising rapidly.
This narrow maritime passage between the Persian Gulf and the Gulf of Oman handles nearly 20% of the world’s crude oil and one-fifth of liquefied natural gas (LNG) exports. Its closure would likely trigger a sharp spike in oil prices, disrupt nearly 30% of global energy flows, and possibly ignite a global energy crisis.
The Strategic Chokepoint
The Strait of Hormuz is one of the world’s most critical arteries for energy transit. In 2023, an estimated 20.9 million barrels of oil per day passed through its waters, according to the U.S. Energy Information Administration. At its narrowest, the Strait shrinks to just 21 nautical miles wide, forcing all maritime traffic to navigate through Iranian and Omani territorial waters—exposing it to geopolitical risk.
Iran’s dominant geographic position on the northern side of the Strait has been heavily militarized. The Islamic Revolutionary Guard Corps Navy (IRGCN) has developed a formidable array of asymmetric capabilities suited to the Strait’s constrained environment—anti-ship missiles, naval mines, fast-attack boats, kamikaze drones, and submarines. Regular Iranian military drills simulate closure scenarios, reinforcing Tehran’s ability to control or deny access to the passage.
Escalating Tensions in the Region
The security environment has sharply deteriorated following Israel’s surprise attack on Iranian military targets, triggering four days of intensifying conflict. Commercial shipping companies are already diverting routes away from the Strait, mirroring the caution exercised in the Red Sea during recent Houthi attacks.
The crisis reflects a deeper regional volatility, particularly the deepening Iran-Israel rivalry, with potential spillover effects that could extend to the broader Middle East and beyond. Iran’s threat to close the Strait marks a significant escalation, drawing alarm from energy-importing nations across Europe and Asia.
Global Economic Fallout
A closure of the Strait—even temporary—would have swift and severe consequences. Oil prices could surge past $100 per barrel, potentially reaching $150, which could exacerbate inflation in already strained economies. For countries dependent on energy imports, the result would be higher fuel costs, utility bills, and transportation expenses.
LNG supplies from Qatar—one of the world’s largest exporters—would face significant disruption. Insurance premiums for vessels in the region would rise steeply, and global supply chains, still reeling from COVID-19 disruptions and ongoing geopolitical shocks, could falter once again.
The International Energy Agency (IEA) and major powers may be compelled to intervene to stabilize energy markets. However, alternatives to the Strait are limited, less efficient, and unable to fully compensate for lost capacity.
India’s Vulnerability
India faces particularly acute risks. It imports over 80% of its crude oil, with nearly 60% transiting through the Strait of Hormuz. A closure would directly threaten India’s energy security, escalate import costs, and strain an economy already grappling with inflation and currency volatility.
LNG imports—mainly from Qatar—could be severely impacted, with potential knock-on effects such as power shortages and reduced industrial output. Strategically, India would need to intensify diplomatic engagement with Gulf states and global powers to de-escalate tensions while also accelerating its push for energy diversification through expanded ties with Russia and the U.S., as well as investments in renewables and strategic reserves.
Capt. Nikunj Parashar, Founder and Managing Director of Sagar Defence Engineering, noted in a conversation with BharatShakti, “India’s naval presence and its doctrine of being a Net Security Provider in the Indian Ocean Region give it a pivotal role in maintaining open sea lanes.”
He added, “The Indian Navy may step up patrols and joint exercises to ensure safe passage for commercial shipping, further asserting its position as a responsible regional actor.”
U.S. and Allied Responses
The United States, through its Fifth Fleet based in Bahrain, has long maintained a strong military presence in the region. In response to the current crisis, it has intensified aerial surveillance, naval patrols, and drone operations to monitor Iranian movements.
The U.S. mission is clear: ensure freedom of navigation in international waters, a principle enshrined in international law. If Iran moves to close the Strait, the U.S. may be forced to respond militarily. Washington’s strategy rests on a dual track—deterrence through readiness and diplomacy to prevent further escalation.
Yet, Iran’s strategy appears calibrated. Even the mere threat of closure can shake markets, giving Tehran geopolitical leverage without direct confrontation.
Iran’s Strategic Calculus
Despite its posturing, Iran has economic incentives to avoid a full blockade. It remains heavily dependent on oil exports, which a closure would curtail. However, Iran appears to be using the Strait as a bargaining chip—to raise the costs of aggression and compel international attention.
Historically, Iran has leveraged threats to close the Strait during periods of sanctions or nuclear negotiations. The current context—an active military exchange with Israel—dramatically raises the stakes.
A Fragile Artery, A Global Concern
The Strait of Hormuz is more than a regional flashpoint—it is a critical lifeline for the global economy. Any disruption could send shockwaves through global markets, from Asia to Europe to the Americas. While a full-scale closure would likely invite military retaliation and hurt Iran itself, even the threat has destabilized markets and exposed the fragility of global energy infrastructure.
Preserving the openness of the Strait is vital for global stability. The current crisis highlights the pressing need for international coordination, strategic energy reserves, and proactive diplomacy. As geopolitical rivalries intensify, securing critical energy corridors, such as the Strait of Hormuz, has never been more crucial.
Huma Siddiqui
