Will Iran Pull The Plug On The World’s Oil Lifeline? Is India Ready For The Fallout?

New Delhi: Iran is talking about a move that could throw the global oil market into chaos. And this time, it is not just a political threat, it is halfway to being law. Iran’s parliament has approved a plan to close the Strait of Hormuz, a narrow stretch of water that carries nearly a fifth of the world’s daily oil supply.

The timing is not random. The decision comes on the heels of U.S. airstrikes targeting three of Iran’s nuclear facilities – a move that has escalated tensions in a region already simmering from years of conflict.

Major General Kowsari, a member of the Iranian parliament’s National Security Committee, confirmed on June 22 that while the legislative approval is complete, the final go-ahead will rest with the Supreme National Security Council – Iran’s most powerful decision-making body on national security matters.

If it greenlights the move, Iran will not have to fire a missile to make global markets shudder. Closing the Strait of Hormuz, even temporarily, could do that all by itself.

Why Hormuz Matters More Than You Think

To the untrained eye, the Strait of Hormuz might look like just another patch of blue on the map. But in geopolitical circles, it is better described as the world’s oil jugular.

This narrow sea passage, just 33 kilometers across at its tightest point, connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. Oil-rich giants like Iran, Saudi Arabia, Kuwait, Iraq and the United Arab Emirates (UAE) rely on it to ship their crude to the world. Every day, about 17 million barrels of oil pass through it that is roughly 20% of global consumption.

Even liquefied natural gas, which fuels homes and industries from Tokyo to London, travels through Hormuz. Almost a third of global LNG flows through this same fragile corridor.

What Happens If Iran Shuts It Down?

The fallout would be immediate and severe. Oil prices would shoot up. Shipping insurers might hike premiums or pull coverage altogether. Supply chains, especially in Asia, could be thrown into turmoil.

The U.S. Energy Information Administration estimates that around 2.6 million barrels per day could potentially be rerouted through pipelines in Saudi Arabia and the UAE, but that still leaves a major gap.

For nations heavily dependent on Gulf oil, including India, China, Japan and South Korea, the impact could hit fuel prices, manufacturing costs and inflation within days. Panic buying and speculation in global markets would likely follow.

What About India?

India has made a conscious effort to diversify its energy partnerships, bringing in more oil from Russia and alternative Gulf suppliers. But a sizable chunk of its energy security still ties back to the Gulf, and by extension, the Strait of Hormuz.

Union Petroleum Minister Hardeep Singh Puri tried to calm nerves in an interview, saying the situation was “manageable” and that current energy rates were “under control”. But the numbers tell a more complicated story. A sharp and sustained rise in oil prices could ripple across the Indian economy, affecting everything from transport to groceries.

Can Iran Actually Close the Strait?

Technically, no. Under international maritime law, the Strait of Hormuz is considered an international waterway. Iran cannot legally bar ships from passing through.

But that has not stopped them before.

Iran has long used the threat of closing the strait as a geopolitical weapon. Doing it would require either direct military action or the threat of it – both of which risk provoking a heavy international response, particularly from the U.S. Navy’s Fifth Fleet, which is permanently stationed in the region.

And there is another wrinkle – shutting the strait could hurt Iran too. Tehran’s own oil exports rely on the same route. Iran has an oil terminal at Jask, located right at the eastern edge of the strait. Blocking it could turn into economic self-sabotage.

The China Equation

One of the quietest but most critical players in this equation is China. As Iran’s biggest oil buyer and a major diplomatic ally, Beijing has consistently shielded Tehran from U.N. sanctions and Western-led diplomatic isolation.

But if Hormuz is shut and oil prices soar, even China could lose patience. Its own economy would take a hit, and diplomatic relations could turn frosty fast. A move meant to punish the United States could end up alienating one of Iran’s few steadfast friends.

The world is now watching the Supreme National Security Council in Tehran. Its decision could determine whether the Strait of Hormuz remains open or becomes the next flashpoint in an already volatile Middle East.

With war drums echoing across the Persian Gulf, one narrow waterway has turned into a global nerve centre. The stakes are massive, the consequences unpredictable and the clock is ticking.