(Image source from: Freeworldmaps.net)

Iran is contemplating shutting down the crucial oil transport route, the Strait of Hormuz, following the US airstrikes on three of its nuclear sites, according to reports from Iranian media today. The Strait of Hormuz serves as a vital chokepoint in the global market, facilitating the passage of approximately twenty percent of the world’s oil and gas supplies. This narrow channel links the Persian Gulf with the Arabian Sea and the Indian Ocean. It measures around 33 kilometers at its narrowest point, separating Iran to the north from the Arabian Peninsula to the south. However, the shipping lanes within this passage are even more constricted, just 3 kilometers wide in either direction, rendering them susceptible to threats and potential closures, which is a course of action that Iran is now opting for.

Most oil exports from regional players including Saudi Arabia, Iraq, the UAE, Qatar, Iran, and Kuwait must navigate this tight waterway. Previously, it was primarily Western nations—especially the US and Europe—that were most vulnerable to interruptions in energy supplies from the Persian Gulf. Now, however, it is China and other Asian countries that would feel the significant effects of any blockade. The Strait of Hormuz is particularly significant for India, as nearly 2 million barrels per day of its total 5.5 million barrels daily crude oil imports pass through this route. Nevertheless, India has diversified its import sources and industry experts believe that even if the Strait is closed, it would not be severely affected, since alternatives from Russia, the US, and Brazil are readily available to compensate for any shortfall.

Russia's oil is largely independent of the Strait of Hormuz, transported instead through the Suez Canal, around the Cape of Good Hope, or via the Pacific Ocean. Additionally, Qatar, India's main supplier of gas, does not rely on the Strait of Hormuz for its shipments. India's other liquefied natural gas (LNG) sources from Australia, Russia, and the US would remain unaffected by any closure of this route. However, the increased tensions within this key energy hub are expected to have a short-term effect on market prices, with analysts predicting that oil prices could rise to $80 per barrel.