Why does the Strait of Hormuz’s closure matter? Premium

Explore the significance of the Strait of Hormuz and its impact on global oil trade, especially for India amidst rising tensions.

The story so far: The Strait of Hormuz, one of the world’s most strategically important chokepoints, has been experiencing a near-total collapse in commercial traffic following rising tensions in West Asia. More than 20% of the world’s total oil and gas shipments, and nearly 40% of India’s, pass through the strait.

The Strait of Hormuz, only 33 kilometres wide at its narrowest, lies between Iran, Oman, and the UAE. It is a vital route for oil and gas from Saudi Arabia, Qatar, Kuwait, Iraq, and Iran leaving the Persian Gulf to various destinations.

Other important shipping chokepoints in the world include the natural Malacca Strait off Singapore through which almost the entire west-bound Chinese maritime trade takes place; the Bab-al-Mandab at the mouth of the Red Sea, which has come under Houthi influence; the artificial Suez Canal connecting Europe and Africa-Asia; the artificial Panama Canal linking the Pacific and Atlantic Oceans; and the straits of Bosphorus and Dardanelles connecting the Mediterranean and Black Sea via the Sea of Marmara, which are crucial not just for nations such as Romania but also for Russia.

While Egypt and Panama hold sovereignty over the Suez and Panama canals, respectively, Turkey has exclusive sovereign rights over the Bosphorus and Dardanelles straits. Nations such as Malaysia and Singapore, and Iran and Oman play a major role in securing the natural straits (Malacca and Hormuz) while not holding sovereignty over them. India has been building naval presence in the Andaman and Nicobar Islands with the strategic aim of gaining leverage over Chinese trade across the Malacca Strait.

Since February 28, when the U.S. and Israel attacked Iran, and Iran retaliated, ship traffic across the strait has reduced by some 95%. Nine ships have faced attacks in or near the strait. Shipping is a high-risk business and even small damages can prove costly to repair. Lloyds List Intelligence, a maritime information provider, estimates that some 600 ships are now stranded in the region. Some 250 are bulk carriers carrying loose cargo such as coal, ores, and grain. Others include some 200 oil tankers and 50 gas carriers.

International law generally treats the seas as commons. Though territorial waters and exclusive economic zones are recognised, in general, laws and practices tend to be favourable towards free usage of all of the seas by merchant ships, and by naval ships for “innocent” passage.