$80 per oil barrel: 4 ways Strait of Hormuz closure will impact India, and what the Govt?can?do?about?it

The war against Iran continues to escalate, with the United States getting directly involved in a bombing campaign against the country¡¯s nuclear facilities. President Trump further escalated his rhetoric on June 22 with him claiming that he¡¯s aiming for a full-scale regime change in Iran, which had led to fears about a long-drawn out conflict, something vice-President JD Vance ended up directly addressing in an interviews with NBC News¡¯s Meet the Press.

There is no credible evidence of Iran developing nuclear weapons, but even without such an arsenal, Iran¡¯s regime has powerful economic leverage at its disposal, namely its control over the Strait of Hormuz. Should the regime blockade this vital trade route, mass economic disruption is sure to follow, with India being no exception.

Here are 4 ways a blockade might disrupt the Indian economy, and what the Govt can do about it.

1. India imports 40% of its oil from the Middle East

Crude oil prices may rise. | Credit: X

40% of India¡¯s oil supply is imported from Middle-Eastern countries such as Kuwait, Saudi Arabia, Iraq and the United Arab Emirates. All the trades routes for these countries pass trough the Strait of Hormuz, so a blockade will disrupt the oil supply from all these regions.

What India can do: Diversify its supply focus to alternative countries such as Russia, and Qatar.

2. Oil prices may rise to $80 per barrel

? ?? ??: BREAKING: IRANIAN PARLIAMENT HAS VOTED TO CLOSE STRAIT OF HORMUZ.

- 20% of the Worlds oil supply travels through this area.

- Expect major oil price spike, major supply shortages, and inflation reverberating throughout the US and oval economy. pic.twitter.com/JJ7pDXnGMn

¡ª Maine (@TheMaineWonk) June 22, 2025

The Strait of Hormuz blockade¡¯s supply disruptions are likely to raise global oil prices beyond the current benchmark of $77. Prices can go up to $80 per barrel, or even $90, per analysts like Goldman Sachs, should the situation continue to escalate.

What India can do: Provide oil and petroleum subsidies to cushion the impact of short-term fluctuations and prevent the costs from being passed down to the consumer.

3. Increased diplomatic dependence on Russia and Qatar

While alternative suppliers such as Russia and Qatar provide a large proportion of India¡¯s oil already, the Strait of Hormuz blockade will risk increasing India¡¯s dependence on them. India¡¯s trade relations with Russia have already come under scrutiny thanks to the war in Ukraine, so it may be prudent to diversify the alternatives at the country¡¯s disposal.

What India can do: Lean further into suppliers from the United States, West Africa and Latin America, even if those suppliers end up more expensive.

4. Supply chain disruptions and delays

We have been closely monitoring the evolving geopolitical situation in the Middle East since the past two weeks. Under the leadership of PM @narendramodi Ji, we have diversified our supplies in the past few years and a large volume of our supplies do not come through the Strait¡­

¡ª Hardeep Singh Puri (@HardeepSPuri) June 22, 2025

Even if adequate trade deals remain in place, a major blockade will still have cascading effects and lead to broader disruptions in the crude oil supply chain. An escalating war against Iran may lead to hard-to-anticipate delays in oil shipments, not to mention the disruptions that inevitably arise when India reworks its suppliers.

What India can do: Tap into its strategic petroleum reserves to offset short-term supply disruptions and ensures the country never suffers from an extended petroleum shortage.

Escalating tensions in the Middle East are bound to disrupt crude oil supply chains for not just India, but many regions across the world. However, as Union Minister Hardeep Singh Puri has said, India is already diversifying its suppliers and reducing its dependence on the contested trade route. With the right steps towards preparedness, India can weather the imminent disruptions and maintain its geopolitical strength.

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