Iran-Israeli War: After the US strikes in three nuclear places of Iran – Natanz, Isfahan and Fordow – the Parliament of the Islamic Republic called for the Hormuz Strait. However, the final decision will be made by its Supreme National Security Council. Such a step could be unprecedented because the Republic of Islam has not done it in any war or conflict.
“I call on the Chinese government in Beijing to call them about it because it depends strongly on the Strait for their oil. If it does, it will be another terrible mistake. It is economic suicide for them,” said US secretary Marco Rubio, according to Fox News.
What is the Hormuz Strait?
The Hormuz Strait, which is located between the Persian Gulf and the Omani Gulf, is the only naval passage from the Persian Gulf to the open ocean. It is considered to be one of the most strategically vital points in the world and serves as the main export route for oil producers in the Gulf, including Saudi Arabia, the United Arab Emirates, Iraq and Kuwait.
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It allows almost 20 % of the world’s daily oil consumption, around 20 million barrels. At its narrowest point, the strait is only 33 kilometers wide, while the transport stripes in each direction measures only 3 kilometers across.
According to media reports, almost 50 large oil tankers are currently trying to leave the Hormuz Strait. The renewed threats of Iran in response to recent US strikes have intensified concerns about the extent in which the Gulf conflict could disrupt the global oil supply.
The importance of the Strait of Hormuz
The US Energy Information Administration (EIA) believes that “Hormuz flows through 2024 and the first quarter of 2025 for more than a quarter of the total global oil trade and about one fifth of global oil consumption and oil products”. In addition, approximately one fifth of global trade in liquefied natural gas has also transferred Hormuz in 2024, especially from Qatar.
Due to its strategic geographical location, there is no alternative maritime path to the Hormuz Strait. As a result, any disturbance of transport through the Strait would have significant consequences for global oil and LNG trade, which would probably cause prices to appear. Since oil prices affect a wide range of goods and commodities, such fluctuations should ripple throughout the global economy.
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If Hormuz closes, what could mean for India?
“84% of raw oil and condensate and 83% of the liquefied natural gas, which was moving the Hormuz Strait, went to the Asian markets in 2024. China, India, Japan and South Korea were the highest destination for oil moving in Hormuz to Asia, 69% of Hormuz and fitness in 2024.
More than two -thirds of oil imports in India and almost half of its liquefied natural gas (LNG) of imports pass through the Hormuz Strait. Of the 5.5 million barrels of India’s oil, it consumes approximately 1.5 million daily through this key waterway.
Foreign Affairs expert Robinder Sachdev informed the news agency or: “If Iran closes Hormuz, India certainly suffers. About 20 percent of the world’s oil and 25 % of natural gas flow in the world.” He added that India will face challenges because rising oil prices lead to higher inflation. It is estimated that every time increased oil prices by $ 10, Indian GDP could be influenced by 0.5 %.
“There is more and more oil”
Meanwhile, the Minister of Oil and Natural Gas India, Hardeep Singh Puri, is sure there is enough oil on the global market. “The price of oil for a long time was between 65 and 70 (USD per barrel). Then it was between 70 and 75. Today is Sunday. When the markets open tomorrow, the global markets will be available.
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He added: “Global markets are coming more and more oil, especially from the western hemisphere. Even traditional suppliers would be interested in maintaining stocks because they also need income. Hopefully the market will take into account.”
Prognosis of Brent oil price
In his statement at Livemint.com Madhavi Arara, Chief Economist, Emkay Global Financial Services, he said, “We have $ 70/BBL in July Brent assumption for FY26, with average on average and accompanying and being accommodating and being used by Irans.”
Furthermore, she said: “From now on, we do not change our forecasts, and we can still see that inflation CPI underlines the RBI estimate of 3.7% to a much lower 3.3 to 3.4%* in FY26.
“We maintain FY26E CAD/HDP to 0.8%, in Brent 70/BBL, every $ 10/BBl leads to a risk of 0.4-0.5%, Ceteris paribus our growth FY26 EST to 6.0%could see the risk of 16-20 bps on average 80 $/BL after a year vs. $ 70/BL ASSUMED.
(Tagstotranslate) Strait of Hormuz
