Explained: What Is Strait of Hormuz — And How Its Blockade Could Squeeze Your Pockets

Iran Israel News: As tensions in the Middle East flare up with the US bombing key Iranian nuclear sites, a narrow stretch of water halfway across the world—the Strait of Hormuz—has suddenly become a major worry for everyone, including the Indian public.

If you're wondering how a conflict thousands of miles away could affect your petrol bill or stock investments, here’s a simple breakdown.

What is Strait of Hormuz, and Why is It Important?

The Strait of Hormuz is a narrow waterway between Iran and Oman that connects the Persian Gulf to the Arabian Sea. It’s only about 33 km wide, but don’t be fooled by its size—it is one of the most critical energy routes in the world. Around 20% of the world’s oil and a large share of natural gas pass through this strait every single day.

Source: Google Maps

Countries like Saudi Arabia, the UAE, Iraq, and Iran all export most of their oil through this route. Even India, which is the world’s third-largest oil importer, sources a large chunk of its crude from Gulf nations.

That’s why any disruption here causes oil prices to rise globally and affects Indian households too.

What’s Happening Now?

After US airstrikes on three major Iranian nuclear sites—Fordow, Natanz, and Isfahan—Iran is reportedly considering a dramatic move: shutting down the Strait of Hormuz. Though Iran has often threatened this in the past, this time the threat seems more serious, as the country’s parliament has approved the closure. The final decision rests with its top leaders.

Market experts are already on edge. Sugandha Sachdeva, founder of SS Wealthstreet, explained, “The current geopolitical escalation provides the perfect catalyst for prices to spiral towards $100 and possibly even $120 per barrel.” She warns that oil markets are now being “driven by fear”, and this makes sharp price spikes very likely.

How Does This Affect the Common Indian?

If the Strait of Hormuz is blocked, even for a short time, crude oil prices around the world could shoot up. For the common Indian, this would mean higher petrol and diesel prices at the pump. As fuel costs rise, transportation and shipping become more expensive, which can make everyday items like food and groceries cost more, too.

Flight tickets may also go up as airlines face higher jet fuel prices. On top of that, the government may have to spend more on oil subsidies, which could strain the country's finances and affect the overall economy.

Also Read: Will Oil Hit $110 in 2025? Goldman Sachs Warns of Global Shock

India currently imports over 85% of its crude oil needs, so even a small price hike globally can significantly increase our fuel bills. However, the good news, according to Oil Minister Hardeep Singh Puri, is that India has diversified supply routes and OMCs have reserves for several weeks. But a prolonged crisis would still hurt.

Oil prices have jumped nearly 2%, with Brent crude hovering around $78.52 per barrel and touching intraday highs above $81. Analysts at Goldman Sachs have warned that if the Strait of Hormuz were to be partially closed, crude could briefly spike to $110 a barrel, which would send inflation soaring globally.

Will Iran Shut Strait of Hormuz?

After the US carried out airstrikes on Iran's nuclear sites, Iran’s parliament on Sunday passed a proposal to shut down the Strait of Hormuz — a key route for global oil shipments. However, the final decision on whether to actually block the strait will be made by Iran’s top security body, the Supreme National Security Council.

While Iran’s threat is serious, experts believe a full and prolonged closure is unlikely. As Sugandha Sachdeva points out, “A blockade would also hurt Iran economically,” because even Iran’s own oil exports go through the same strait.

Plus, major oil-importing nations like China, Japan, and India would exert immense diplomatic pressure to prevent such a disruption.