Iran’s Parliament has approved a proposal to close the strategically vital Strait of Hormuz, according to state-owned Press TV. The final decision now rests with Iran’s Supreme National Security Council, which will determine whether to implement the move.
This development comes in the wake of recent U.S. strikes on Iranian nuclear facilities, marking Washington’s official entry into the ongoing Iran-Israel conflict. While the strikes were limited to infrastructure and reportedly caused no radioactive contamination, they have significantly escalated tensions in West Asia and heightened volatility in global energy markets.
What Does Iran’s Decision to Close the Strait of Hormuz Mean for Global Oil Supply?
Iran has threatened retaliation, including possible attacks on U.S. military installations in the Gulf. The prospect of blocking the Strait of Hormuz oil transit route — a critical chokepoint through which nearly 20 million barrels of oil, or around 20 per cent of the world’s daily consumption, transit — has become increasingly credible.
Iran’s Foreign Minister Seyed Abbas Aragchi emphasized that Tehran has “a variety of options” and will defend itself “by all means necessary.” U.S. Secretary of State Marco Rubio warned China against supporting Iran in this move, calling such action “economic suicide” given China’s heavy dependence on oil passing through the Strait.
Why Is the Strait of Hormuz Critical for Global Energy Security?
The Strait of Hormuz, situated between the Persian Gulf and the Gulf of Oman, is the only maritime passage connecting the Persian Gulf to the open ocean. It serves as the main export route for key Gulf oil producers including Saudi Arabia, the UAE, Iraq, and Kuwait.
At its narrowest point, the Strait is only 33 kilometres wide, with shipping lanes of just 3 kilometres each for incoming and outgoing traffic. Nearly 50 large oil tankers are reportedly trying to exit the Strait amid growing uncertainty.
The U.S. Energy Information Administration (EIA) notes that over one-quarter of global seaborne oil trade and one-fifth of global oil and petroleum product consumption flowed through the Strait in 2024 and early 2025, underscoring its central role in global energy security.
How Are Oil and Gold Markets Reacting to Iran-US Tensions?
Following the U.S. strikes and Iran’s threats, Brent crude prices surged over 10 per cent to $77 a barrel, with analysts projecting further increases up to $83 or $90 if the Strait closes. The price gap between Brent and WTI crude also widened significantly.
Gold, often a safe haven during geopolitical crises, gained over 2 per cent and may approach record highs near $3,500 an ounce. Conversely, silver prices may lag due to its industrial uses, which could be hurt by rising energy costs dampening demand.
Impact of Strait of Hormuz Closure on India’s Oil and Gas Imports
India, along with China, Japan, and South Korea, receives the bulk of its crude oil and liquefied natural gas (LNG) through the Strait of Hormuz. According to the EIA, 84 per cent of crude oil and condensate and 83 per cent of LNG flowing through the Strait in 2024 were destined for Asian markets.
India imports more than two-thirds of its oil and nearly half of its LNG via this corridor. Of the 5.5 million barrels India consumes daily, approximately 1.5 million barrels pass through the Strait.
Foreign affairs expert Robinder Sachdev told ANI, “If Iran closes the Strait of Hormuz, India will definitely suffer. Around 20 per cent of the world’s crude oil and 25 per cent of natural gas flows through here. Rising oil prices will lead to higher inflation and could reduce India’s GDP growth by about 0.5 per cent for every $10 increase in crude prices.”
However, India’s Minister of Petroleum and Natural Gas, Hardeep Singh Puri, expressed cautious optimism, stating, “There is enough oil available in global markets. More supply is coming, especially from the Western Hemisphere, and traditional suppliers have an incentive to keep the oil flowing.”
Are There Alternatives to the Strait of Hormuz for Oil Transportation?
Saudi Arabia and the UAE have developed overland pipelines as alternatives, but these can handle less than half the Strait’s capacity. Any closure would disrupt supply chains, increase shipping costs, and drive insurance premiums higher.
The crisis underscores the vulnerability of global energy markets to geopolitical disruptions in West Asia. Rising crude prices have already increased India’s current account deficit, which nearly doubled to 1.3 per cent of GDP in FY25, reflecting higher import costs.
Why Did the US Carry Out Strikes on Iranian Nuclear Facilities?
U.S. officials say the strikes were a strategic warning aimed at bringing Tehran back to negotiations, but Iran has continued missile attacks on Israel with no sign of de-escalation. Secretary of State Marco Rubio urged China to influence Iran to avoid closing the Strait, highlighting Beijing’s heavy reliance on the waterway.
India’s Energy Strategy Amid Strait of Hormuz Crisis: Diversification and Challenges
India has diversified its crude sources in recent years, increasing Russian crude imports that bypass the Strait of Hormuz to 38 per cent by May 2025, up from less than 1 per cent in early 2022. Despite this, domestic prices remain linked to global benchmarks, and oil remains a significant part of India’s import bill.
