Blocking of Strait of Hormuz will impact India's energy procurement: Experts

Any blocking or disruption of traffic through the Strait of Hormuz — a narrow passage connecting the Persian Gulf to the Arabian Sea — will have significant global and regional impact, including for India's energy security, strategic affairs experts said on Sunday.

Following the US bombing of three major Iranian nuclear sites, Tehran has indicated that closing the Strait of Hormuz for shipping is one of the options on the table to pressure its adversaries.

Nearly 30 per cent of global oil and a third of the world's LNG (liquefied natural gas) passes through the strait daily and its closure would immediately reduce global supplies triggering a spike in prices, they said.

The closure of the narrow passage would have significant global repercussions across energy markets and it will impact India's energy security as well, Dr Laxman Kumar Behera, associate professor at the Special Centre for National Security Studies at Jawaharlal Nehru University, told PTI.

Behera said any disruption in the critical shipping lane will majorly impact India's crude oil import from Iraq and to an extent from Saudi Arabia.

Captain D.K. Sharma (retd), a former Indian Navy spokesperson who closely follows developments in the Gulf region, said Iran's threat to block the Strait of Hormuz could lead to significant disruptions in global oil trade.

Any disruption in shipping traffic could impact insurance premiums, causing costlier rerouting of oil shipments, he argued.

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"Oil prices are expected to surge due to the increased tensions in the region, with some analysts predicting prices to reach USD 80-USD 90 per barrel or even USD 100 per barrel if Iran responds with retaliatory measures," he noted.

Sharma also said that the currencies of the countries in the region may experience significant volatility, and investors may look for other stable markets.

According to a recent analysis by the International Energy Agency, even a brief disruption of passage through the Strait of Hormuz will have a significant impact on oil markets.

"With geopolitical and economic uncertainties affecting oil producers and consumers alike, oil supply security remains high on the international energy policy agenda," it said.

The US on Sunday morning bombed three major nuclear sites — Fordow, Natanz and Isfahan — in Iran, bringing itself into the Israel-Iran conflict Later, US President Donald Trump said the Iranian nuclear sites were "totally obliterated".

Behera said Iran will also face economic consequences if it shuts down the Hormuz strait as such a move will severely cripple Tehran's exports.

Since the start of Iran's hostilities with Israel, Iranian officials have spoken about the possibility of shutting the Strait of Hormuz. Mohammad Javad Hosseini, the deputy chief of mission at Delhi's Iranian embassy, on Friday said closing the Strait of Hormuz was an option.

"We have many things on the table, but it doesn't mean that we are going to do it now. It depends on the situation and how the other players want to go. If they want to solve the problem, definitely some of these things will be put aside," he said.