Changed reality: On India and the Strait of Hormuz
Nations rise to power on the strength of their economies and, by extension, trade. Historically, countries such as the United Kingdom, Japan, the United States and China have combined economic prosperity with maritime dominance. India’s weak shipping sector reflects its geopolitical position. Yet, its seafarers generate billions of dollars in foreign exchange while facing risks from piracy and geopolitical tensions. The recent conflict with Iran showed that control of strategic waterways can be as consequential as economic sanctions. By leveraging the Strait of Hormuz , Iran exposed a critical vulnerability in the global economy. Disruptions to energy flows imposed costs far beyond the battlefield and the economic consequences appear to have played a significant role in shaping the U.S. response. From a shipping perspective and its Hormuz stakes, Iran may have secured strategic gains despite the heavy damage inflicted on it by Israeli and U.S. Even as the attacks on Lebanon cast a shadow over the peace deal, Iran has announced that the Persian Gulf Strait Authority it set up during the war will be the sole authority that will handle Strait of Hormuz transits. The memorandum of understanding envisages lifting sanctions on Iran and on ships serving Iranian trade. It also mandates Iranian talks with Oman and other Gulf states on maritime administration in the Strait of Hormuz. Previously, vessels transiting the Strait neither paid tolls nor reported to Iran or Oman. Whether or not the new framework results in transit fees is less important than the reality: that shipping companies must now account for Iran as a decisive stakeholder in the Strait of Hormuz. For India, the conflict has exposed a major strategic weakness. Despite the Strait of Hormuz being vital to its energy security, the disruption exposed the absence of a credible contingency plan for such eventualities. India’s LPG strategy relies heavily on imports moving through the Strait of Hormuz, supported by a limited fleet of Indian-flagged carriers and a tightly scheduled supply chain with little long-term cavern storage. Similar vulnerabilities affected other fuel supplies too. Many countries are now reassessing their dependence on the Strait of Hormuz. The United Arab Emirates is pursuing a “zero Hormuz dependency” strategy by strengthening alternative infrastructure and routes. India must draw lessons from the crisis. Diversifying supply chains, investing in alternative maritime and land corridors, and strengthening strategic partnerships should become priorities. Projects such as Chabahar offered precisely such an opportunity but India gave up on it. For India, reducing dependence on the Strait of Hormuz is no longer just an economic goal; it is a strategic necessity. Published - June 22, 2026 12:30 am IST Read Comments Copy link Email Facebook Twitter Telegram LinkedIn WhatsApp Reddit READ LATER SEE ALL Remove Related Topics USA / United Kingdom / Japan / China / waterway and maritime transport / India / shipping service / foreign exchange market / international relations / economic sanction / Israel-US strikes on Iran / Iran / trade policy / Oman / energy and resource / United Arab Emirates
- 1The Strait of Hormuz episode underscores a critical gap in India's energy security governance. India's Constitution under Article 246 and the Seventh Schedule vests energy policy in the Union List (Entry 53), making strategic energy reserves a central government responsibility. Yet India lacks adequate strategic petroleum reserves (SPR) compared to the International Energy Agency's 90-day benchmark, and has no dedicated maritime security doctrine for protecting energy supply lines — a gap that Parliament and the Cabinet Committee on Security must urgently address.
- 2Iran's assertion of authority over the Strait of Hormuz reshapes the Gulf security architecture, which India has historically navigated through its 'Look West' and 'Act West' policies. India's abandonment of the Chabahar port project — a rare strategic foothold on Iran's Makran coast that could provide land access to Afghanistan and Central Asia bypassing Pakistan — has left India geopolitically exposed. The India-Middle East-Europe Economic Corridor (IMEC), announced at the G20, now assumes greater urgency as an alternative connectivity framework to reduce Hormuz dependence.
- 3From a legal-regulatory standpoint, the new Persian Gulf Strait Authority raises novel questions under the United Nations Convention on the Law of the Sea (UNCLOS), specifically Article 38, which guarantees the right of transit passage through international straits used for international navigation. Iran is not a party to UNCLOS, but customary international law obligations and the balance between sovereign claims and freedom of navigation will be central to any future maritime dispute. The International Maritime Organization (IMO) may be called upon to adjudicate conflicting claims.
- 4Economically, the Strait of Hormuz carries roughly 20–21 million barrels of oil per day — approximately 20% of global petroleum trade — making it the world's most critical energy chokepoint. India imports over 85% of its crude oil needs, with a substantial portion originating from Gulf states dependent on Hormuz transits. The conflict-driven disruption likely caused short-term spot price spikes and freight rate surges. India's limited LPG cavern storage (under 15 days of buffer stock) amplifies price transmission risks to domestic consumers, highlighting the need for the proposed Padur and Chandikhol SPR expansions.
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