NEW DELHI, July 12 — For India, the third-largest oil importer on the planet, any disruption at the Strait of Hormuz is not a distant geopolitical worry—it is a direct line item on the national import bill. The waterway, a slender chokepoint between Iran and Oman, handles roughly 17 million barrels of oil per day, according to 2023 data from the U.S. Energy Information Administration. That figure represents about 20% of global consumption.
A closure, analysts note, could remove this entire supply from the market, spiking crude prices in a way that would hit Indian shores within days.
The scale of the disruption
The numbers are stark. India imports roughly 3 million barrels per day from the Gulf region via this strait. China, the world’s largest crude buyer, takes about 5 million bpd from the Gulf.
Japan and South Korea, at 2 million bpd and 1.5 million bpd respectively, complete the list of major Asian importers that would be most affected. History offers a price benchmark for such a crisis.
In 2019, after attacks on Saudi Aramco facilities, Brent crude briefly rose by 15% to $72 per barrel. That was a temporary, localized shock. A prolonged closure of the Strait of Hormuz would be a different order of magnitude entirely.
Analysts at Goldman Sachs have estimated that such a scenario could push oil prices above $150 per barrel—levels last seen during the 1990 Gulf War.
Strategic reserves and alternative routes
Strategic petroleum reserves offer a cushion, but only a temporary one. The U.S. Strategic Petroleum Reserve currently holds about 375 million barrels as of March 2025. China’s strategic reserve is estimated at 300 million barrels.
These stockpiles could provide relief measured in weeks, not months, if the strait remains closed. Alternative shipping routes exist, but they cannot fully compensate.
The Bab el-Mandeb strait at the southern tip of the Red Sea and the Suez Canal offer pathways for some Gulf oil, but the logistics are constrained. Tanker capacity, insurance costs, and transit times all rise sharply. The closure would also affect liquefied natural gas shipments.
Qatar, a major LNG supplier to India and the broader Asian market, exports about 77 million tons of LNG annually through the Strait of Hormuz. A disruption would squeeze gas-dependent industries.
Market mechanics and the Asian impact
The mechanism is straightforward. Remove a fifth of daily global oil supply from the market, and prices respond violently. For Japan and South Korea, the stakes are equally high.
Both nations are heavily reliant on Middle Eastern crude and LNG. Their strategic stockpiles, while substantial, would be tested by a prolonged closure.
China, with its massive refining capacity and growing strategic reserve, has the financial muscle to outbid smaller buyers in a tight market—a dynamic that would create friction within Asia’s energy trading relationships.
Looking ahead
The Strait of Hormuz has been a flashpoint before, during the Iran-Iraq war in the 1980s and in periodic confrontations since. The current geopolitical environment, with tensions across the Persian Gulf, keeps the risk alive. Market participants are watching for any signs of naval posturing or diplomatic breakthroughs.
For now, the arithmetic is unforgiving: 17 million barrels a day, 20% of global consumption, and a chokepoint that cannot be easily bypassed. That is the reality that India and its Asian neighbours must price into their energy security calculus.
Sources
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