Blocking of Strait of Hormuz will impact India’s energy procurement: Experts

Any blocking or disruption of traffic through the Strait of Hormuz — a narrow passage connecting the Persian Gulf to the Arabian Sea — will have significant global and regional impact, including India’s energy security, strategic affairs experts said on Sunday.

Following the US bombing of three major Iranian nuclear sites this morning, Tehran has indicated that closing the Strait of Hormuz for shipping is one of the options on the table to pressure its adversaries.

Nearly 30 per cent of global oil and a third of the world’s LNG (liquefied natural gas) passes through the strait daily and its closure would immediately reduce global supplies triggering a spike in prices, they said.

The shutting down of the narrow passage would have significant global repercussions across energy markets and it will impact India’s energy security as well, said Dr Laxman Kumar Behera, Associate Professor at Special Centre for National Security Studies at the Jawaharlal Nehru University.

Behera said any disruption in the critical shipping lane, which is a geopolitical flashpoint, will majorly impact India’s crude oil import from Iraq and to an extent from Saudi Arabia.

Captain DK Sharma (retd), a former Indian Navy spokesperson who closely follows developments in the Gulf region, too said Iran’s threat to block the Strait of Hormuz could lead to significant disruptions in global oil trade.

Any disruption in shipping traffic could impact insurance premiums, causing costlier rerouting of oil shipments, he said.

“Oil prices are expected to surge due to increased tensions in the region, with some analysts predicting prices to reach $80-$90 or even $100 per barrel if Iran responds with retaliatory measures,” he noted.

Sharma also said that the currencies of countries in the region may experience significant volatility, and investors may look for other stable markets that could impact the region’s economic growth.

According to a recent analysis by the International Energy Agency, even a brief disruption of passage through the Strait of Hormuz will have a significant impact on oil markets.

“With geopolitical and economic uncertainties affecting oil producers and consumers alike, oil supply security remains high on the international energy policy agenda,” it said.

The US on Sunday morning bombed three major nuclear sites — Fordow, Natanz and Isfahan — in Iran, bringing itself into the Israel-Iran conflict. Later, US President Donald Trump said the Iranian nuclear sites were “totally obliterated”.

On its part, Iran warned that the US strikes will have “everlasting consequences”.

Iranian Foreign Minister Abbas Araghchi said the US has committed a “grave violation” of the UN Charter, international law and the nuclear non-proliferation treaty by attacking Iran’s “peaceful nuclear installations”.

“The events this morning are outrageous and will have everlasting consequences,” he said.

Behera said Iran will also face economic consequences if it shuts down the Hormuz Strait as such a move will severely cripple Tehran’s exports.

Since the start of Iran’s hostilities with Israel, Iranian officials have spoken about the possibility of shutting the Strait.

Mohammad Javad Hosseini, the deputy chief of mission at the Iranian embassy, on Friday said closing the Strait of Hormuz is an option.

“We have many things on the table, but it doesn’t mean that we are going to do it now. It depends on the situation and how the other players want to go. If they want to solve the problem, definitely some of these things will be put aside,” he said.

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