Expert Explains: ‘The Strait of Hormuz is simply too vital an artery to remain closed for too long’

Ajay Singh, an energy and shipping executive based in Tokyo, analyses the likely impact to India’s energy supplies due to the conflict in the Persian Gulf and the potential impact on the Strait of Hormuz.

With military operations in the Persian Gulf, what is the impact on India’s energy supplies likely to be?

The Persian Gulf is the most important source of oil and gas for India. Around 90% of India’s imports of LPG, 40% of its LNG and 35% of its crude oil came from the Persian Gulf in 2025; this year, with oil imports from Russia potentially reducing, imports from the Gulf could be expected to be even higher. At the moment, the Iranian military has announced that ships should stay clear of the Strait of Hormuz. Consequently, shipping through the Strait has more or less stopped and no supplies can be expected to flow out of the Gulf for the time being.

That said, India and other importing countries would have stockpiles of these commodities to last several weeks, precisely to cater for such exigencies. As long as the blockade is not a prolonged one, there should not be any immediate problem for consumers. We have to wait and see.

Given all of these factors, there will be an impact in terms of pricing even if there is no physical scarcity. To some extent the markets had already factored in the possibility of a conflict but now that it has occurred, we may expect a spike in energy prices when the markets reopen.

What are the odds of the blockade being short lived? A tanker has reportedly already been attacked.

Most shipping companies immediately ordered their ships to stay away from the Strait of Hormuz and its vicinity when hostilities commenced on Saturday, responding to government advisories.

The circumstances around the attack that was reported are not clear, for e.g. why the vessel was present in that location at that time despite the advisories. In such situations there is much possibility of confusion, miscommunication and so on. We cannot definitively draw any conclusions from the single incident. Thankfully there was no loss of life.

We are probably still in the early days of the conflict and the range of scenarios that could come to pass is still too wide for any meaningful prediction to be possible. From an energy security perspective, what will be most important is the restoration of confidence in the safety of navigation in the Persian Gulf, especially in the Strait of Hormuz. Ideally, that could come via some kind of unambiguous signal such as a ceasefire announced by all warring parties.

More than anything else, at this time the possibility of that happening hinges on what political developments will next occur in Iran regarding its future leadership. If, unfortunately, the fighting continues for a long time, or there is internal strife within Iran, or some sort of guerilla warfare erupts then we are looking at a worse scenario.

However, all of this notwithstanding, the Strait of Hormuz is simply too vital an artery for the global economy — close to a quarter of the world’s supply of oil and gas passes through it — for its closure to be tolerated for too long. Restoring marine traffic will be among the topmost priorities for most parties concerned at this time.

Could a situation like the ‘Tanker War’ of the 1980s develop, where over 400 ships were attacked over several years?

The Tanker War of 1984-88 had quite a different context in many ways but it does offer an important pointer. It was a subset of the war between Iran and Iraq, countries more or less on par with each other in terms of military capability, both employing roughly similar means of disruption. I am not qualified to go into the military aspects, but there seems to be a wide disparity in capabilities as well as staying power between the current adversaries.

And although I suppose technological developments offer more varied and stealthy means of offense, they also enable more effective surveillance and defense than were available four decades ago.

The main conclusion I draw from the Tanker War is that, after an initial reduction in flow of oil and gas through the Strait, there was surprisingly little disruption in the flow of oil and gas. There was a tragic loss of life among the tanker crews and other personnel, but the militaries of various countries ensured that the Strait was kept open.

Are there any alternatives to mitigate disruption of energy flow from via the Strait of Hormuz?

Unfortunately, not immediately. In case of crude oil, the main exporter from the Gulf –Saudi Arabia – does have the means to physically divert a substantial quantity of oil from its main export point of Ras Tanura on the Persian Gulf to Yanbu on the Red Sea, via an on-land pipeline. However, Saudi exports from Yanbu to Asia are unlikely – they almost stopped during 2024-25 due to the threat from the Houthis. In case of LPG and LNG even such diversion possibilities are non-existent due to the cryogenic nature of these commodities and the consequent lack of alternative pipeline routes.

Iran has attacked several other Gulf countries in response to the US and Israeli air strikes. Do you see these impacting oil and gas supply in the long run?

So far, damage to production facilities in other Gulf countries seems negligible. To cause any major economic disruption, the Iranians will have to destroy a great deal of production capacity. Ample extra capacity of 3-4 million barrels / day exists in the world, so I do not see this as a major risk at present. Similarly, in the case of LNG, several new supply projects will start up in the near future in the US and elsewhere.

*Ajay Singh is a management advisor based in Tokyo. He is also a former Shell and Japan Petroleum Corporation executive with considerable experience of the Middle East.*

Anil Sasi is the National Business Editor at The Indian Express, where he steers the newspaper’s coverage of the Indian economy, corporate affairs, and financial policy. As a senior editor, he plays a pivotal role in shaping the narrative around India's business landscape. Professional Experience Sasi brings extensive experience from some of India’s most respected financial dailies. Prior to his leadership role at The Indian Express, he worked with: The Hindu Business Line Business Standard His career trajectory across these premier publications demonstrates a consistent track record of rigorous financial reporting and editorial oversight. Expertise & Focus With a deep understanding of market dynamics and policy interventions, Sasi writes authoritatively on: Macroeconomics: Analysis of fiscal policy, budgets, and economic trends. Corporate Affairs: In-depth coverage of India's major industries and corporate governance. Business Policy: The intersection of government regulation and private enterprise. Education Anil Sasi is an alumnus of the prestigious Delhi University, providing a strong academic foundation to his journalistic work. Find all stories by Anil Sasi here ... Read More