All eyes have shifted to an oil corridor between the Persian Gulf and the Gulf Of Oman, called 'The Strait of Hormuz', right after the US struck various nuclear facilities of Iran, joining the tension between the Islamic regime and Israel. On June 23, US President Donald Trump said, monumental damage was done to nuclear sites in Iran. The Ali Khamenei-backed Iran has threatened to close the Strait of Hormuz. While the US has warned against closing the passage, calling it an economic suicide from Iran's end. But how does the Strait of Hormuz impact India?
What Is Strait of Hormuz?
This oil corridor named 'Strait of Hormuz', basically a strait between the Persian Gulf and the Gulf of Oman, is one of the world's largest and most strategic chokepoints. The strait is between three Middle East countries and is about 167 KM long with width varying from 96 Km to 39km. To the north of the strait is Iran, and to the south is the Musandam peninsula which is shared by the United Arab Emirates and an exclave of Oman called Musandam Governorate.
Strait of Hormuz is pivotal for international trade, as about 25% of the world's total oil consumption and a third of its liquefied natural gas passes through this corridor.
Right after the US strike, Iran's parliament voted to close the Strait of Hormuz on June 22. The decision is pending approval from the Islamic Republic's Supreme National Security Council.
How Does the Closing Of the Strait of Hormuz Impact India?
"The Strait of Hormuz (SoH) is a key energy choke point through which almost 20% of global oil and LNG is traded. Any escalation in the conflict in the area could significantly impact global supplies and prices," ICRA said in its note.
Data from the rating agency revealed that Iran straddles the (Strait of Hormuz), which remains one of the key energy choke points. Before June 13, Iran's production is around 3.3 mbd, of which it exports 1.8-2.0 mbd.
Meanwhile, of the around 20 mbd of oil supplied through the SoH, more than 80% is consumed in Asia, of which China, India, Japan and South Korea together account for around 65%, the data added.
"There are limited alternative options for the evacuation of crude from West Asia. Saudi Arabia and the UAE have pipelines in place with a surplus capacity of around 2.5-3.0 mbd, leaving a significant supply at risk, in case the conflict heightens," ICRA's note said.
ICRA's note highlighted that India is significantly dependent on crude imports through SoH. Imports from Iraq, Saudi Arabia, Kuwait and the UAE that are routed through the SoH account for ~45-50% of the total crude oil imports to India. Noteworthy, Russia accounted for ~36% of the total crude oil imported into India in FY2025.
In the case of LNG, ICRA stated that nearly 54% of natural gas imports for India pass through SoH as a major share of term LNG originates from Qatar (under the RasGas contract) and the UAE. Also, disruption in the SoH may result in supply uncertainties from Qatar and the UAE, which may result in higher dependence on the spot LNG market.
"Any such disruptions are also expected to result in higher spot LNG prices as well as higher LNG tanker rates, impacting end-user industries," adding ICRA said, "Additionally, domestic gas prices and LNG contracts with crude oil-linked pricing will witness an uptick as crude oil prices firm up."
For APM gas prices, ICRA added, "In India, APM gas prices had fallen below the ceiling price in June 2025 for the first time since April 2023, when the Kirit Parikh Committee's recommendation was implemented as crude oil prices had softened amid tariff tensions and increase in output announced by the OPEC+ nations."
Given the sharp rise in crude oil prices, the APM gas price is likely to revert to $6.75/mmbtu while the NWG price is expected to rise by ~10% in July 2025, if the crude oil prices sustain at current levels. ICRA added, "with mounting tensions resulting in disruption in LNG transit from Qatar,spot LNG prices would rise sharply."
Donald Trump's Warning To Iran:
In the early hours of June 23, US President Donald Trump through his Truth Social said, "Monumental Damage was done to all Nuclear sites in Iran, as shown by satellite images. Obliteration is an accurate term! The white structure shown is deeply imbedded into the rock, with even its roof well below ground level, and completely shielded from flame. The biggest damage took place far below ground level. Bullseye!!!"
Trump revealed it was the great B-2 stealth bombers that hit Iran's nuclear facilities. Trump further took a jibe at the Islamic regime of Iran, saying, "It's not politically correct to use the term, "Regime Change," but if the current Iranian Regime is unable to MAKE IRAN GREAT AGAIN, why wouldn't there be a Regime change??? MIGA!!!"
Further, Trump warned that any retaliation by Iran against the United States Of America will be met with force greater than what was witnessed during the weekend.
Meanwhile, Iran and Israel continue to strike each other severely.
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