Why is News :
- Iran’s Parliament has approved a proposal to block the Strait of Hormuz, pending a final decision by the Supreme National Security Council.
- This comes in response to recent US airstrikes on Iranian military sites, making the threat of a blockade more serious than in previous decades.
About the Strait of Hormuz
- A narrow maritime chokepoint connecting the Persian Gulf with the Gulf of Oman and Arabian Sea.
- It is located between Iran and Oman, within their territorial waters.
- At its narrowest, the strait is just 33 km wide, with only 3 km wide shipping lanes in each direction—making it geopolitically vulnerable.
Global Energy Significance
- It is the world’s most critical oil and LNG transit route.
- Handles over 25% of global seaborne oil trade and 20% of global oil consumption.
- Around 20% of global LNG, especially from Qatar, also passes through this route.
- There is no alternative sea route to bypass Hormuz, and overland pipelines in Saudi Arabia and UAE are inadequate compared to the 20 million barrels per day transported via Hormuz.
Nature of the Threat
A full blockade could involve:
- Sea mines
- Missile or drone attacks
- Vessel seizures or detentions
- Cyberattacks on maritime logistics systems
While Iran has previously threatened but never closed the strait, analysts believe doing so now could backfire economically and diplomatically, especially with China, Saudi Arabia, and the UAE.
Potential Global Consequences
A blockade could:
- Trigger global oil and gas price spikes.
- Disrupt supplies to China, which gets nearly 47% of its seaborne oil from the Gulf.
- Provoke a strong US military response (e.g., US Fifth Fleet based in Bahrain).
- Affect freight, insurance premiums, and cause refinery margin stress globally.
Impact on India
- India is the world’s third-largest oil consumer, with over 85% dependency on imports.
- In May, nearly 47% of Indian crude oil imports passed through the Strait.
- Supplies from key partners like Saudi Arabia, Iraq, UAE, Qatar, and Oman would be jeopardized.
- While Russia and African countries are alternatives, their supply routes are longer and more expensive.
Price Volatility Risks
- Even if actual supply isn’t cut off, global price surges are expected due to panic and insurance risks.
- A rise in oil prices (e.g., to USD 80 per barrel) could:
- Widen trade deficits
- Weaken the rupee
- Impact forex reserves
- Spike domestic inflation
China’s Role and Its Implication for India
- If Iran’s exports to China are blocked, China may turn to other oil suppliers.
- This could intensify global competition, pushing prices higher and affecting India’s import costs and refining margins.
India’s Preparedness
- India has access to strategic oil reserves covering 9–10 days of consumption.
India can diversify supply through:
- The Suez Canal (for Russian oil)
- Cape of Good Hope
- Pacific routes for Australian and US LNG
- Qatar’s LNG remains mostly unaffected, as supplies often bypass Hormuz via alternate lanes.
Government Measures to Mitigate Impact
India may consider:
- Subsidizing diesel and LPG to protect consumers.
- Enhancing strategic reserves for future contingencies.
- Negotiating long-term deals with alternative partners.
| UPSC Relevance : GS2 – International Relations: Implications of Middle East tensions on India’s strategic partnerships. GS3 – Economy, Energy Security: Effects on India’s trade, inflation, and preparedness for energy supply disruptions. Possible Mains Questions “A blockade of the Strait of Hormuz would destabilize not only the Gulf but also global energy markets.” Analyze with reference to India’s energy security. |