What Happens if Strait of Hormuz Closes: What is the Strait of Hormuz and why is it called the lifeline of the world’s oil supply? If this sea route is closed, what will be the impact on the prices of petrol and diesel? Can inflation increase in the whole world including India? Know the complete story of this important waterway.
Why is Strait of Hormuz Important: Amidst the increasing tension in the Middle East, the eyes of the world have once again turned to the Strait of Hormuz. After the recent conflict between America and Iran, concern regarding this important sea route has increased. The news of Iran issuing a strict warning on the movement of ships and the worsening security situation in the region has increased the heartbeats of the global markets. In such a situation, the question is arising that what is the Strait of Hormuz, why is it so important and if the crisis deepens here, how big can its impact be on the world and India?
Where is the Strait of Hormuz?
The Strait of Hormuz is a narrow sea route connecting the Persian Gulf and the Gulf of Oman. Iran is situated in its north and Oman and United Arab Emirates (UAE) in the south. A large part of the oil and natural gas produced from Gulf countries reaches different countries of the world through this route. This is why it is also called the world’s most important “Oil Corridor”.
Why is the Strait of Hormuz so important?
Exports from big energy producing countries like Saudi Arabia, Iraq, Kuwait, UAE and Qatar take place through this route. A large part of the world’s seaborne oil trade passes through the Strait of Hormuz. If we understand in simple language, if the world economy is a machine, then the Strait of Hormuz is the most important pipeline to deliver oil to that machine.
What will happen first if the Strait of Hormuz is closed?
If the movement of ships in this route stops or is disrupted, then first of all there may be a sharp rise in the prices of crude oil in the international market. The effect of oil becoming expensive is not limited to just petrol and diesel. Prices of air travel, transport, freight, power generation and everyday goods may also increase. This means that inflationary pressure may increase in many countries of the world.
If the Strait of Hormuz is closed, how much will it affect India?
India imports a large part of its energy needs and much of the oil coming from the Gulf countries passes through this sea route. In such a situation, if the Strait of Hormuz remains affected for a long time, India’s import bill may increase. This may affect the prices of petrol and diesel, transportation costs and expenses of the common people. This is the reason why the big economies of the world including New Delhi keep a constant eye on every activity in this region.
Why is the entire world’s eyes fixed on the Strait of Hormuz?
The Strait of Hormuz may appear to be a small sea route on the map, but its importance is linked to the economy of the entire world. This is the reason why any crisis arising in this region is not limited to the Middle East only, rather its impact can reach almost every country in the world.