Iran Moves to Block Strait of Hormuz:

GS2 – International Relations

Context

• Following U.S. airstrikes on its nuclear facilities under Operation Midnight Hammer, Iran’s Parliament has approved a plan to close the Strait of Hormuz, a critical global oil transit chokepoint.

Strait of Hormuz: Strategic Significance

• Location: Lies between Iran and Oman, linking the Persian Gulf with the Gulf of Oman and the Arabian Sea.

• Dimensions: At its narrowest, it’s 21 miles (33 km) wide, with shipping lanes just 2 miles wide in either direction.
• Maritime Importance:
  • Serves as the passageway for around 20% of global oil and liquefied natural gas trade.
  • Essential for maritime access for Iran, Saudi Arabia, UAE, and other Gulf countries.

Global Implications of Closure

1. Oil Supply Disruption:
   • Immediate global impact as a fifth of world energy trade moves through the Strait.
   • Could lead to shortages and sharp spikes in oil and gas prices.
2. Trade Blockade:
   • Gulf nations have no alternative sea route, making this choke point vital for imports and exports.
3. Global Inflation:
   • Energy-importing countries (e.g., India, China, EU nations) would face inflationary pressures due to higher fuel prices.
4. Economic Instability:
   • Disruption could cause financial stress, especially for oil-dependent economies.

Impact on India

1. Energy Security Threat:
   • India sources ~40% of its crude oil and nearly 50% of its gas via the Strait.
2. Inflation Surge:
   • Fuel price hikes (petrol, diesel, LPG) could worsen domestic inflation.
3. Trade Deficit and Currency Pressure:
   • Rising import costs may widen the current account deficit and weaken the rupee.
4. Growth Slowdown:
   • Higher energy import bills may hamper industrial growth and economic stability.
5. Trade Disruptions:
   • India’s trade with the Middle East and beyond could face logistical challenges, as this route is vital for both exports and imports.