New Delhi: With Iran edging closer to a possible closure of the Strait of Hormuz, a critical global energy chokepoint, alarm bells are ringing across major energy-importing nations, especially India.
Following a June 22 parliamentary vote in Tehran, which, though non-binding, signals a sharp escalation in regional tensions. The risk of severe disruption to oil and gas flows looms large. As geopolitical fault lines deepen, India faces rising energy insecurity, global trade disruptions and the spectre of a wider military confrontation in the Middle East.
According to a research note prepared by Global Trade Research Initiative (GTRI) founder Ajay Srivastava, the Strait, which carries nearly 25% of global oil shipments and significant LNG volumes, remains open for now. As the parliamentary vote is not binding, a final decision rests with Iran’s Supreme National Security Council, which is still deliberating. While no closure has been enacted yet, the risk of disruption looms amid escalating U.S.–Iran tensions.
Meanwhile, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri on Sunday said, "As far as the global situation today is concerned, the escalation of tensions in the Middle East was not entirely unexpected. We had foreshadowed this. The government, under the PM, has been consistently reviewing the situation, including the possibility of the closure of the Straits of Hormuz.
The minister added that we had diversified the sources of supply, "Out of the 5.5 million barrels of crude oil that India consumes daily, about 1.5-2 million come through the Straits of Hormuz. We import roughly 4 million barrels through other routes. Our oil marketing companies have enough stocks. Most of them have stocked up to three weeks. One of them has 25 days' stock".
"We can increase the supply of crude through other routes... We are in touch with all possible actors... There is no cause for any alarm on this score. We will be watching the unfolding situation, and the PM has already spoken with all the major leaders. He's had a long conversation with the President of Iran calling for de-escalation. Meanwhile, we continue to be prepared to meet the evolving situation", added Puri.
According to the GTRI report, India is especially vulnerable to a possible Strait of Hormuz Closure: nearly two-thirds of its crude oil and half of its LNG imports transit this route. Any closure could send oil prices soaring, sharply inflating India’s import bill, worsening inflation, and putting pressure on the country’s fiscal position. Shipping insurance premiums and freight costs are also expected to surge, squeezing not only India’s energy markets but also broader trade between Asia and Europe.
Geopolitical Stakes Rise
Ajay Srivastava further mentioned in this report that the potential global impact extends far beyond oil. An estimated $1.2 trillion in annual maritime trade flows through the Gulf. Disruption of Qatar’s LNG exports would send European gas prices sharply higher, while Indian industries dependent on global supply chains for energy, chemicals, fertilisers, metals, and food products could face serious shortages and escalating costs.
Simultaneously, the situation in the nearby Red Sea is deteriorating. Following Israeli airstrikes on Houthi forces on June 14–15, tensions have escalated, placing India’s westbound exports at fresh risk. Nearly 30 per cent of India’s exports to Europe, North Africa, and the U.S. East Coast transit through the Bab el-Mandeb Strait, which is now increasingly vulnerable. If security conditions force shipping to reroute via the Cape of Good Hope, delivery times could increase by up to two weeks, sharply raising costs for Indian exporters of engineering goods, textiles, chemicals, and critical imports, he added.
Risk of Military Escalation
The report further suggests that the threat of military escalation in the event of the Strait of Hormuz Closure remains acute. The U.S. Navy’s Fifth Fleet, based in Bahrain, may intervene to ensure freedom of navigation through the Strait. The United Kingdom and France are expected to deploy naval escorts to safeguard their own oil and gas interests. China and India, the two largest energy importers from the Gulf, face mounting supply risks and are likely to pursue de-escalation through diplomatic channels, suggests the research note.
Ajay Srivastava also mentioned that Russia, hoping for higher energy prices, may tacitly support Iran’s move, though this risks straining ties with Gulf partners. A prolonged closure of the Strait risks triggering a wider military conflict across the Gulf region, with grave geopolitical and economic implications for all major economies — particularly for energy-dependent nations like India.
Global Escalation Risk
According to this note, while Beijing and Moscow have so far avoided direct military confrontation with Washington, their diplomatic support for Iran has heightened global concern. With the United States and Israel confronting Iran militarily, and China and Russia backing Tehran, the current situation brings the world closer than it has been in decades to a World War III–level confrontation. In a region that remains vital to global energy supplies and trade flows, the risk of escalation — whether by design or miscalculation — has rarely been higher.
