Israel-Iran Conflict Threatens Strait of Hormuz, Global Oil Supply at Risk

The Strait funnels 30% of global seaborne oil trade and 20% of liquefied natural gas (LNG) shipments, according to 2024 trade data. Each day, over 20 million barrels of oil and 290 million cubic meters of LNG pass through the narrow channel, where shipping lanes are restricted to just 9 km of safe navigable space.

Notably, the Strait of Hormuz is the only marine entryway into the Persian Gulf. It splits Iran on one side and Oman and the United Arab Emirates on the other, linking the Persian Gulf to the Gulf of Oman and the Arabian Sea in the Indian Ocean.

Image: The geographical placement of Strait of Hormuz makes it a crucial trade point.

Source: TRT 

Threat to Global Trade: Most Strategic Chokepoint on the Brink

As per the U.S. Energy Information Administration Strait of Hormuz is the world's most important oil chokepoint because large volumes of oil flow through the strait.

While the UAE and Saudi Arabia have alternate pipeline routes, others—Qatar, Kuwait, Bahrain, and Iran itself—are entirely dependent on unhindered passage through the Strait.

The EIA notes that nearly 21% of global petroleum liquids consumption in recent years has flowed through this route. A prolonged disruption could push Brent crude above $100 per barrel, destabilize shipping routes, and inflate maritime insurance costs along key corridors from the Suez Canal to the Strait of Malacca.

Arne Lohmann Rasmussen, Chief Analyst and Head of Research at Global Risk Management, called the closure of the Strait an “absolute nightmare” for the oil market.

“If Iran blocks this narrow chokepoint, it could affect up to 20 percent of global oil flows,” he said. “A closure would likely send oil prices above $100.”

 Image: EIA representation of Strait of Hormuz marked as most important oil chokepoint.

Source: U.S. Energy Information Administration

Asia Most Exposed; India May Face Cost Shock

Asian economies—particularly India, China, Japan, and South Korea—stand most exposed due to their heavy reliance on Gulf oil. According to EIA data, 82% of the crude oil and condensate that transited the Strait of Hormuz in 2022 was destined for Asian markets. 

Janiv Shah, Vice-President for Oil Markets at Rystad Energy, underscored the regional vulnerability: 

“In the scenario where there is a full closure of the Strait of Hormuz, Asia would be most impacted by the lack of crude. China and India account for most of the destination volumes, with limited global capacity to substitute similar oil grades.”

India, still awaiting progress on strategic alternatives like the Chabahar Port and the India-Middle East-Europe Corridor (IMEC), could face steep import costs and delivery disruptions.

Kuldip Singh, retired Indian Army Brigadier, wrote:

“India would be especially affected... Iran may not want to upset China, India, and South Korea.”

Military Control vs Legal Limits: The Balance of Power

While Iran cannot legally block the Strait under the UN Convention on the Law of the Sea (UNCLOS), it maintains formidable military leverage. With command over seven of the eight islands in the Strait and naval bases at Bandar Abbas, Bushehr, and Chabahar, Iran could disrupt traffic using anti-ship mines, drones, submarines, or speedboat swarms.

While Iran has never acted on previous threats to block the Strait, the current geopolitical escalation makes the possibility more plausible than before. Any such move could cause severe energy shocks across Asia, with India and China facing immediate cost burdens and logistical disruption. The Strait of Hormuz remains a fragile artery—its stability now deeply tied to the wider fallout of the Israel-Iran conflict.