US enters Israel-Iran conflict: What is Strait of Hormuz and how could its closure impact petrol-diesel prices in India?
New Delhi: Any disruption in the Strait of Hormuz, a strategic waterway linking the Persian Gulf and Arabian Sea, will carry deep global and regional consequences, particularly for India’s energy security, experts have said.
The warning comes in the wake of US air strikes on three key Iranian nuclear sites—Fordow, Natanz and Isfahan—early Sunday morning. Following the attacks, Tehran warned that shutting the Strait of Hormuz was “on the table” as a potential response.
Nearly 30 per cent of global oil and a third of liquefied natural gas (LNG) passes through the Strait daily. Experts believe any closure would trigger an immediate drop in supply, pushing prices up sharply.
Dr Laxman Kumar Behera, Associate Professor at the Special Centre for National Security Studies, Jawaharlal Nehru University, 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.”
He added that India’s oil imports from Iraq and Saudi Arabia would be particularly affected if the route is blocked.
Iran’s retaliation may roil oil prices and currencies
Retired Indian Navy spokesperson Captain D K Sharma also warned of disruptions to global oil trade. “Iran’s threat to block the Strait of Hormuz could lead to significant disruptions,” he said.
He pointed out that such a move could increase insurance premiums and lead to costlier rerouting of shipments.
"Oil prices are expected to surge due to increased tensions in the region, with some analysts predicting prices to reach USD 80-USD 90 per barrel or even USD 100 per barrel if Iran responds with retaliatory measures,” Sharma said.
He added that currencies across the region may witness high volatility, potentially driving investors towards more stable markets and affecting regional growth.
According to the International Energy Agency, even a short-lived blockage at the Strait would rattle 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 noted.
US attacks on Iran provoke strong condemnation
The US bombing of Fordow, Natanz and Isfahan marks its direct entry into the Iran-Israel conflict. US President Donald Trump stated that Iran’s nuclear sites were “totally obliterated.”
In response, Iran’s Foreign Minister Abbas Araghchi said the strikes were a “grave violation” of international law and the UN Charter.
“The events this morning are outrageous and will have everlasting consequences,” Araghchi said, accusing the US of targeting Iran’s “peaceful nuclear installations.”
Behera also warned that Iran itself would face economic fallout if it chose to shut the Strait, which would cripple Tehran’s exports.
India braces for indirect economic shocks
Although India imports minimal crude directly from Iran, the ripple effects on the global supply chain are expected to influence domestic fuel pricing. India primarily sources oil from Russia, Iraq, Saudi Arabia, the UAE, and the US, but remains exposed to international price movements.
Analysts said crude oil on MCX could cross ₹6,200 per barrel if tensions persist. Should global prices sustain above USD 80, India’s retail fuel rates could rise in the coming weeks.
Fuel prices stable, but outlook uncertain
At present, retail petrol and diesel prices in India remain steady. However, oil marketing companies are expected to reassess rates should global crude continue climbing.
Experts have cautioned that supply route disruptions could trigger short-term price surges. With India importing nearly 88 per cent of its oil, the economy remains vulnerable to such shocks.
The ongoing Iran-Israel crisis and US strikes continue to weigh heavily on financial markets. Any further escalation could keep gold and crude oil prices high, putting household budgets and macroeconomic stability at risk.