Hormuz Under Fire: Geopolitics, Oil Shock & India’s Energy Security Strategy

By Amarthya Chandar | Wildlife biologist | Wildlife research | UPSC Aspirant

The Strait of Hormuz has been in focus in recent times in light of Iran’s retaliatory blockade of maritime traffic through its waters. Connecting the Persian Gulf to the Arabian Sea through the Oman Gulf, the strait has an indispensable role in global trade, and is an enduring global energy chokepoint. Joint US-Israeli missile strikes on Iran in February this year resulted in retaliatory threats from Iran which included the shutting down of this important trade corridor, cutting maritime traffic through it by up to 95%, disrupting global oil flow. The Strait of Hormuz is an important topic for UPSC aspirants given its significance in West Asian geopolitics.

The Strait of Hormuz

Strategic Location

With Iran to the north and an Omani peninsula to the south, it is a very narrow maritime passage – with its narrowest point being only ~33 km wide. Due to Iran’s coastal proximity and military presence on nearby islands, it asserts large de facto control over the strait which is responsible for 25% of global maritime oil exports and 20% of global LNG trade from countries like Saudi Arabia, UAE, Iraq, Qatar and Kuwait. Since there are no seaborne alternatives, Iran’s blockade of this passage has stoked immense tensions, and has intensified geopolitical flashpoints.

Timeline – How the crisis unfolded

On February 28, 2026, US-Israel’s ‘Operation Epic Fury’ launched precision missiles on Iran’s nuclear sites and also targeted and eliminated Supreme Leader Ayatollah Khamenei. In response, Iran rained down missiles on US bases and Israeli intelligence infrastructure, air force bases and civilian areas including parts of Tel Aviv and Haifa – major cities of Israel. Iran’s Islamic Revolutionary Guard Corps announced that the strait was closed for shipping and attacked merchant vessels already in the strait – including US-flagged oil tankers and ships registered to Malta. Immediately, ship traffic plunged from around 135 daily vessels to 3-4, leaving thousands of ships stranded. However, now, Iran officially vets ‘allied’ countries like India and China for safe passage of their vessels through a ‘safe shipping corridor’ inside its territorial waters.

Control over critical chokepoints like the Strait of Hormuz doesn’t just influence trade, it shapes global power, energy security, and economic stability.

Global Trade Fallout – Oil & shipping prices skyrocket

Crude oil trade went from about $66 to $82-$106 per barrel – an approximately 35% surge. If Iran is to continue blockading the Strait of Hormuz, oil can exceed prices of $120 per barrel which could potentially cause global economic instability, analysts say.

Shipping insurance premiums saw a 100% increase of vessel value per transit, and freight rates and bunker fuel costs have become inconveniently expensive – Singapore High Sulfur Fuel Oil bunker prices shot up about 35% since late February, and real-time market prices of LNG tankers skyrocketed more than 40% in one trading session, sending prices easily exceeding $250,000 per day.

Impact on Indian energy sector – How India coped with the disruption

India imports 85% of its crude oil and 50% of its LNG from West Asia, Africa and America. About half of all this passes through the Strait of Hormuz to reach India. Global surges sent LNG prices up to approximately $25 from about $10 per MMBtu. A sustained increase in these costs should ideally prove dangerous for the Indian economy, stoking inflation and deepening India’s current account deficit. However, India maintains an energy buffer of more than 250 million barrels of crude oil and about 4,000 crore litres of refined petroleum products to provide coverage of 7-8 weeks across the supply chain. A government report states that these reserves are stocked across strategic underground caverns in southern India and in above-ground pipelines and tanks and offshore ships.

A deliberate, multi-pronged government strategy has ensured that India does not face the heat of the rising tensions in West Asia. India has now made Russia its top crude oil supplier, and raised the national import share of African/American crude from ~60% to ~70%. So, India does not have to depend only one risky maritime chokepoint for its energy needs anymore. Over the years, India has also developed massively capable and sustainable government-run Oil-Marketing Companies like Indian Oil (who also provided the majority of the fuel required to carry out Operation Sindhoor), HPCL and BPCL. These OMCs absorbed the hike in freight and insurance costs instead of passing it on to customers – raising petrol prices by a mere average of INR 2.15/L a couple of days ago. Finally, with domestic refining capacity (258 mmtpa) exceeding domestic demand (210-230 mmtpa), India has become a net exporter of refined products like aviation turbine fuel and diesel, further insulating the consumers.

Hormuz Under Fire: Geopolitics, Oil Shock & India’s Energy Security Strategy

India’s Diplomatic Muscle Show

S. Jaishankar, India’s external affairs minister conducted direct talks with Iran, securing safe passage for India-bound LPG tankers. India also alerted the UN and IMO and condemned attacks on trade ships and advised Iran to show restraint on this front. Iran’s ambassador to India also stated that India is a ‘friend’ to India and that the two countries have shared interests between them, thereby allowing Indian LPG ships to pass through the strait.

Amarthya Chandar | Wildlife biologist | Wildlife research | UPSC Aspirant