Iran War, Strait of Hormuz and India's Oil Security: What Is Really at Risk?

 

The conflict involving Iran, Israel and the United States is no longer just a military confrontation in the Middle East. Its consequences are increasingly being felt across global energy markets, shipping routes, inflation and the economies of countries that depend heavily on imported oil.

One of the biggest concerns is the Strait of Hormuz, a narrow waterway between Iran and Oman through which a huge share of the world's oil and liquefied natural gas moves.

For India, the issue is particularly important. The country imports the vast majority of the crude oil it consumes. Any prolonged disruption in Middle Eastern energy supplies could therefore affect fuel prices, transportation costs, inflation, the rupee and the wider economy.

But there is also a danger of oversimplifying the conflict.

The war cannot be explained simply as an American attempt to "take control of oil." The reality involves Iran's nuclear programme, regional security, Israel's concerns, U.S. sanctions, military strategy, energy markets and the broader geopolitical rivalry in the Middle East.

Why the Strait of Hormuz Matters So Much

The Strait of Hormuz is one of the world's most important energy chokepoints.

According to the U.S. Energy Information Administration, an average of around 20.9 million barrels per day of oil passed through the strait during the first half of 2025. That represented roughly a quarter of global maritime oil trade and about one-fifth of global petroleum liquids consumption.

U.S. Energy Information Administration — World Oil Transit Chokepoints

The importance of Hormuz goes beyond crude oil.

Large volumes of liquefied natural gas also pass through the waterway, particularly from major Gulf producers such as Qatar.

This is why even the threat of disruption can move oil and gas prices sharply.

A complete closure would not necessarily mean that every barrel of Middle Eastern oil suddenly disappears from the world market. Some producers have alternative pipelines and export routes.

However, those alternatives cannot fully replace the enormous volume normally transported through Hormuz.

That is what makes the strait strategically important.

Iran's Most Powerful Economic Weapon May Not Be Its Military

The United States and Israel possess significantly more advanced air power, naval capabilities and missile-defence systems than Iran.

Iran therefore does not need to defeat the United States in a conventional military contest to impose costs on its opponents.

Instead, Tehran can attempt to exploit geography.

Iran sits directly next to the Strait of Hormuz. That gives it the ability to threaten commercial shipping, increase insurance costs, disrupt tanker movements and create uncertainty in global energy markets.

Reuters reported on October 4 that Iran was still refusing to fully reopen the Strait of Hormuz unless specific conditions were met.

Reuters — Iran says Strait of Hormuz will not reopen until conditions are met

This creates an unusual military situation.

Iran does not necessarily have to destroy the world's largest naval forces. It only has to make commercial shipping sufficiently risky and expensive to create economic pressure.

Why the Cost of Intercepting Missiles and Drones Matters

Modern warfare is increasingly shaped by cost.

A relatively inexpensive drone or missile can force an opponent to use a much more expensive interceptor.

That does not mean that every Iranian drone costs only a few lakh rupees while every American interceptor costs hundreds of millions, as some claims circulating online suggest. Those figures vary substantially depending on the weapon system, production batch and accounting method.

There is not enough reliable public evidence to treat the exact numbers often quoted in social-media discussions as established facts.

But the broader principle is real.

A country with a large stockpile of relatively inexpensive drones and missiles can create financial and logistical pressure on an opponent that relies heavily on sophisticated defensive systems.

The question is therefore not simply:

Who has the more advanced weapons?

It is also:

Who can sustain the war for longer without exhausting ammunition, interceptors, money and political support?

India's Biggest Vulnerability: Dependence on Imported Oil

This is where the conflict becomes particularly relevant to India.

India is one of the world's largest oil consumers, but domestic crude production covers only a relatively small share of national demand.

According to data reported from government sources, India's crude oil import dependence reached around 88.7% in 2025-26.

That means international oil prices matter enormously to the Indian economy.

When crude becomes more expensive, the consequences can spread across the economy.

Higher oil prices can mean:

• Higher transportation costs

• More expensive aviation fuel

• Higher manufacturing costs

• Increased logistics expenses

• Greater pressure on inflation

• A larger import bill

• Additional pressure on the Indian rupee

The impact does not necessarily appear immediately at the petrol pump.

Fuel is an input into almost every modern supply chain. A rise in transportation costs can eventually affect food, consumer goods, construction materials and other products.

India's Oil Problem Is Bigger Than Petrol Prices

Imagine that the price of crude oil rises sharply.

A refinery pays more for imported crude.

The refinery then produces petroleum products.

Transport companies pay for diesel.

Airlines pay more for aviation fuel.

Factories pay more for energy and transportation.

Retailers pay more to move products.

Eventually, some of those additional costs can reach consumers.

This is why an international conflict thousands of kilometres away can affect the monthly household budget of an Indian family.

Reuters reported in September that rising oil prices linked to the Iran conflict were already putting pressure on Indian financial markets, with concerns about inflation and India's trade deficit.

Reuters — Indian markets and the impact of higher oil prices

Is India Really Holding Only 45 Days of Oil?

One claim frequently repeated in discussions about India's energy security is that India has only around 45 days of oil.

This requires clarification.

India's Strategic Petroleum Reserves (SPR) should not be confused with the country's total petroleum availability.

Strategic reserves are emergency stocks intended to provide a buffer during serious supply disruptions.

They are only one part of the wider energy system, which also includes ongoing imports, commercial inventories, refineries and petroleum-product stocks.

Therefore, saying that "India will run out of fuel in 45 days" if Middle Eastern imports stop would be misleading.

However, the underlying concern is legitimate.

India's very high dependence on imported crude means that a prolonged disruption in global oil supply could create serious economic pressure.

Why Russia Has Become Important for India

Russia has become one of India's most important crude oil suppliers in recent years.

This became particularly significant after the Russia-Ukraine war changed global energy trade.

India increased purchases of Russian crude because Russian oil was available at attractive prices under the circumstances created by Western sanctions and changing trade flows.

But India's relationship with Russian oil is not without complications.

Western sanctions, shipping restrictions, insurance issues, payment mechanisms and changing Chinese demand can all affect how much Russian crude reaches Indian refiners.

This makes diversification important.

India cannot afford to depend excessively on one country or one shipping route.

The Dollar and Oil Trade: A More Complicated Reality

Another common argument is that the United States maintains its global power mainly by forcing countries to buy oil in U.S. dollars.

There is an important historical connection between the dollar and global oil markets, but the issue is more complicated than that.

The U.S. dollar remains the dominant currency in international finance and commodity markets because of the size and liquidity of U.S. financial markets, the dollar's role in global reserves and decades of established trading infrastructure.

That does not mean every oil transaction must legally be settled in dollars.

Countries can and do use other currencies and payment arrangements for some energy transactions.

Therefore, claims that "America attacks every country that refuses to sell oil in dollars" should not be presented as established fact without specific evidence for each case.

Could the Conflict Become Much Larger?

This is one of the biggest uncertainties.

The danger is not limited to Iran, Israel and the United States.

A prolonged conflict could involve other regional actors, armed groups and additional shipping routes.

The Middle East contains several strategically important maritime chokepoints.

Apart from Hormuz, the Bab el-Mandeb Strait is critical for shipping between the Red Sea and the Gulf of Aden.

Reuters reported on October 4 that Yemen's internationally recognized government had announced a major military offensive against Iran-backed Houthi forces after the Houthis gained control of territory near the strategically important Bab el-Mandeb route.

Reuters — Yemen announces military operation against Houthi forces

If both Hormuz and Bab el-Mandeb become significantly disrupted at the same time, global shipping could face a much more serious challenge.

What Happens If Hormuz Remains Disrupted?

There are three major risks.

1. Higher Oil Prices

If fewer barrels reach the global market, buyers compete for a smaller supply.

That normally creates upward pressure on crude prices.

2. Higher Gas Prices

Hormuz is also important for LNG exports.

Any prolonged disruption could therefore affect countries that depend on imported natural gas.

Reuters reported that LNG shipments through Hormuz increased in September despite the continuing conflict, showing that the waterway has not simply become a completely inactive route.

Reuters — LNG shipments through Hormuz increased in September

3. Higher Shipping and Insurance Costs

Even when ships continue moving, a dangerous maritime environment can increase insurance premiums, security expenses and freight rates.

Those costs can eventually be reflected in the prices paid by consumers.

Oil Prices Are Already Affecting Global Markets

The market is already reacting to uncertainty.

On October 4, OPEC+ agreed in principle to keep its November oil-production targets unchanged.

Reuters reported that Brent crude remained above $100 per barrel amid continuing supply concerns related to the conflict.

Reuters — OPEC+ keeps November oil output targets unchanged

The significance of this is bigger than one month's oil price.

If markets begin to believe that supply disruptions could continue for months, companies and governments have to start planning around a much more expensive energy environment.

Can the United States Simply Destroy Iran's Military Capability?

The United States has overwhelming conventional military advantages over Iran.

But destroying military infrastructure is not the same thing as winning a war politically.

Iran is a large country with difficult terrain, extensive missile capabilities and a long history of operating under sanctions.

A major air campaign could destroy military bases, radar installations, missile launchers and other infrastructure.

But rebuilding political stability after a major war would be a completely different challenge.

This is one reason why prolonged conflict can become extremely expensive even for a militarily superior power.

Leadership Changes Do Not Automatically End a War

The conflict has also demonstrated that attacking senior political and military leaders does not necessarily cause a state to collapse immediately.

Iran experienced major leadership disruption during the war, but its state institutions continued to function.

That matters because modern states are complex systems.

They have military chains of command, intelligence agencies, bureaucracies, political institutions and regional networks.

Removing one leader can create chaos, but it does not automatically remove the state's ability to fight.

What About the Claim of a "Greater Israel"?

Some political commentary surrounding the conflict claims that Israel is attempting to establish a larger territorial state extending into parts of neighbouring countries.

Such claims must be treated carefully.

There are political and ideological groups in Israel and elsewhere that have advocated different visions of territorial expansion. But that does not mean every map circulating online represents an official government plan or an agreed military objective.

A responsible article should distinguish between:

official government policy,

statements by individual politicians,

ideological visions,

and

speculation circulating online.

These categories should never be treated as identical.

The Same Caution Applies to Claims About Iran

The opposite mistake is also possible.

Some commentary portrays Iran entirely as a victim, while other commentary presents Iran as solely responsible for the regional crisis.

Neither approach provides a complete picture.

Iran has its own regional military strategy, relationships with armed groups and controversial nuclear programme.

At the same time, Israel and the United States have their own strategic interests and military objectives.

Understanding the conflict requires looking at the actions of all major actors rather than accepting a single country's narrative.

What Does This Mean for India?

India faces a difficult balancing act.

New Delhi has strategic relationships with the United States and Israel.

At the same time, Russia remains important for India's defence and energy interests.

India also has long-standing relations with Iran and major economic interests in the Gulf region.

The safest strategy is therefore not to become dependent on any single geopolitical partner.

For India, long-term energy security should include:

• Larger strategic petroleum reserves

• More diversified crude suppliers

• Greater domestic energy production

• Increased renewable-energy capacity

• Faster electric-vehicle adoption

• More efficient public transportation

• Flexible refinery infrastructure

• Multiple shipping and supply routes

• Greater protection against maritime disruptions

The goal should be simple:

A crisis in one region should not be capable of destabilizing India's entire energy system.

The Bigger Lesson From the Iran Conflict

The most important lesson is not simply about who has the strongest military.

It is about how interconnected the modern global economy has become.

A missile launched in the Middle East can influence an oil futures contract.

A shipping disruption can affect refinery costs.

Higher crude prices can pressure the Indian rupee.

Higher transportation costs can eventually affect the price of food and consumer goods.

In other words, modern warfare does not remain inside national borders.

Its economic consequences travel through supply chains.

Conclusion

The Iran-Israel-U.S. conflict should therefore not be viewed only through the question of military power.

The deeper story is about geography, energy, shipping, finance and economic resilience.

Iran's strategic advantage comes partly from its location next to the Strait of Hormuz. The United States and Israel have superior conventional military capabilities, but Iran has the ability to make a prolonged conflict economically painful.

For India, the biggest concern is its dependence on imported crude.

If the conflict remains limited and shipping continues, the impact may be manageable.

If Hormuz remains seriously disrupted for an extended period, however, the consequences could become much larger—from crude prices and inflation to the rupee, transportation and industrial costs.

That is why India's energy-security strategy matters far beyond the current war.

The central question is not simply who wins the next military confrontation.

The more important question for countries such as India is:

How prepared are they if the world's most important energy routes remain disrupted for months rather than days?

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