What Is the Strait of Hormuz and Why Does It Matter to India?

Explainer By Y-Trendz

What Is the Strait of Hormuz?

The Strait of Hormuz is a narrow waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. At its narrowest navigable point, the shipping channel measures roughly three kilometres

in each direction, yet approximately one-fifth of total global oil consumption transits this corridor every single day.

The Strait of Hormuz is the primary export route for oil produced by Saudi Arabia, the UAE, Kuwait, Qatar, Iraq, Bahrain, and Iran. Apart from physically disrupting oil shipments, any prolonged disruption could also render unavailable the vast majority of the world's spare production capacity — most of which is held by Saudi Arabia.

Why Is It So Critical Globally?

Flows through the Strait of Hormuz in 2024 and the first quarter of 2025 made up more than one-quarter of total global seaborne oil trade and about one-fifth of global oil and petroleum product consumption. In addition, around one-fifth of global liquefied natural gas trade also transited the Strait of Hormuz in 2024, primarily from Qatar.

About 93% of Qatar's and 96% of the UAE's LNG exports transit through the Strait, representing 19% of global LNG trade. There are no alternative routes to supply natural gas from Qatar or the UAE to the global LNG market.

China, India, Japan, and South Korea were the top destinations for crude oil moving through the Strait of Hormuz to Asia, accounting for a combined 69% of all Hormuz crude oil and condensate flows in 2024.

Why Does It Matter So Much to India?

Energy Dependence

India is currently the world's third-largest importer of oil, fourth-largest of LNG, and the second-largest importer of LPG. It is also the world's fourth-largest refiner and fifth-largest exporter of refined petroleum globally.

Before restricted passage through the Strait began in early March 2026, 45% of India's crude oil imports, half of its LNG imports, and 90% of its LPG imports passed through the strait.

India consumes roughly 5.5 million barrels of crude oil per day. India imports crude oil from around 40 countries. About 60% of India's LPG consumption is imported, and about 90% of these shipments typically pass through the Strait of Hormuz.

Economic Impact of Any Disruption

A prolonged Strait of Hormuz closure is not just about higher oil prices but a potential looming energy shortage, with India and Asia disproportionately hit. India imports around 40% of its fertiliser needs directly from the Middle East — among the highest dependency globally — which could over time spill over into global food prices and inflation.

The Indian Rupee is seen as vulnerable and USD/INR could rise above 95 levels if the Iran and Middle East conflict is sustained and the Strait remains closed, with Brent oil prices returning to US$100/bbl.

What Is India Doing About It?

India's petroleum ministry confirmed that about 70% of the country's crude import is now coming from outside the Strait of Hormuz. The volume of crude oil secured by the government exceeds what would normally have arrived through the Strait. Oil marketing companies have secured various crude cargoes through different sources.

India has temporarily rerouted roughly 70% of crude imports away from the Strait of Hormuz, up from 55% — primarily by absorbing sanctioned Russian crude. A durable structural fix involves expanding India's capacity to receive and store non-Hormuz supply at scale, including deepening port capacity at Mundra on India's west coast, which launched India's first terminal for very large crude carriers (VLCCs) in January 2026.

The central government issued a Natural Gas Control Order on March 9, 2026, under the Essential Commodities Act to stabilise distribution. Domestic LPG production has increased by approximately 25% as a mitigating measure.

The Bottom Line

Despite decades of diversification rhetoric, technological advancement, and supply chain sophistication, a single 33-kilometre-wide passage between the Iranian coastline and the Omani peninsula retains the ability to reshape oil prices, currency values, inflation trajectories, and government fiscal positions across India and Asia. For India, energy security and the Strait of Hormuz are inseparable — at least for now.