The Strait of Hormuz is a narrow sea route between Iran and Oman, but it’s one of the most important places in the world for oil. About 21% of the world’s oil passes through here, and for India, this route is vital, as nearly 40-45% of its oil imports come through this path, mainly from countries like Saudi Arabia, Iraq, Kuwait, and the UAE.
India buys 85% of the oil it needs from other countries, using around 5 million barrels every day. Almost half of this oil passes through the Strait of Hormuz. If this route gets blocked or disrupted, India could face a serious energy crisis. Even though India has built emergency oil reserves, they would only last about 10–12 days.
Right now (June 2025), oil prices are about $75–80 per barrel, but if the Strait is blocked, prices could jump 30–50% quickly, reaching $105–120 per barrel. If the situation gets worse, prices might go above $150, like in the 2008 oil crisis. When oil prices go up by just $10, India’s yearly trade deficit can grow by $12–15 billion.
If this happens:
Petrol and diesel prices in India could rise by ₹20–30 per liter.
Inflation (price rise of goods and services) will hit everything, since transport costs affect all industries.
The rupee will fall in value against the dollar as India will need more foreign currency to pay for expensive oil.
To prepare for this, India is:
Buying more oil from places like Africa, the Americas, and Russia.
Building bigger emergency reserves.
Speeding up the use of solar, wind, and hydrogen energy.
For Indian businesses, this would mean:
Higher operating costs.
Lower profits.
Possible supply disruptions.
But there’s a silver lining: this may push India faster towards energy independence with more investment in clean energy.
Disclaimer: LinkedIn