Strait of Hormuz: Iran may shut down strait, US urges China to dissuade Tehran; why it matters

Iran-Israel war: The Iranian parliament has approved a measure to shut down the Strait of Hormuz, which the US has dubbed “economic suicide”. This comes after the US conducted airstrikes on Iranian nuclear sites. The US believes that the decision to close the strait – through which around 20 per cent of the global oil and gas flows – would be a massive escalation in the ongoing Iran-Israel war. 

While the parliament has approved, the Supreme National Security Council of Iran must take the final decision. A member of the Iranian parliament's national security commission Esmail Kosari, said, "For now, the parliament has come to the conclusion we should close the Strait of Hormuz, but the final decision in this regard is the responsibility of the Supreme National Security Council."

Meanwhile, the US has reached out to China to dissuade Iran to not shut the Strait of Hormuz. US Secretary of State Marco Rubio told Fox News: "I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil.” 

"If they do that, it will be another terrible mistake. It's economic suicide for them if they do it. And we retain options to deal with that, but other countries should be looking at that as well. It would hurt other countries' economies a lot worse than ours,” said Rubio. 

Iran’s closing of the Strait of Hormuz is not entirely unlikely as it has long used the same threat as a way to ward off Western pressure. Kosari, also a Revolutionary Guards Commander, had earlier said that closing the strait was on the agenda and "will be done whenever necessary".

WHAT IS THE STRAIT OF HORMUZ?

The Strait of Hormuz, a crucial maritime passage, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Spanning approximately 167 km and narrowing to just 33 km at its slimmest point, the strait is a significant conduit for oil tankers. It facilitates the transport of approximately 17 million barrels of oil daily, accounting for 20 to 30 percent of global oil consumption.

OPEC members, including Saudi Arabia, Iran, the United Arab Emirates, Kuwait, and Iraq, rely heavily on the strait to export their crude, primarily to Asian markets. Despite some efforts by the UAE and Saudi Arabia to find alternative routes, the lack of sufficient infrastructure makes reliance on the strait inevitable. As of last year, approximately 2.6 million barrels per day (bpd) of unused capacity in existing pipelines could bypass the strait, but this remains insufficient compared to the total volume transiting the strait daily.

The geopolitical sensitivity of the Strait of Hormuz, coupled with its narrow width, makes it a focal point for regional tensions. Any attempt by Iran to block or close the strait could lead to severe disruptions in oil supply, causing significant increases in global oil prices. Such an action has the potential to inflame regional tensions and might provoke international naval responses.

Iran's strategic position at the northern side of the strait gives it leverage, but it lacks the legal authority to obstruct shipping traffic through this vital oil choke point. If Iran's navy attempts to block the strait, it could face counter-actions from Western navies patrolling the region, including the US Fifth Fleet.

Further complicating the situation, Iran itself relies on the strait for exporting its oil, with a key terminal located at Jask on its eastern end. Any closure would adversely affect Iran's economy by halting its petroleum exports.

China, as Iran's largest oil buyer, would also be severely affected by a closure of the strait. As a major geopolitical ally, China has often used its influence in the United Nations Security Council to shield Iran from Western-led sanctions.

The closure of the Strait of Hormuz would not only affect oil-exporting nations but would also have cascading effects on global markets.

WILL INDIA BE IMPACTED BY THE CLOSURE?

India is the world's third biggest oil importer and consumer, and gets less than half of its average 4.8 million barrels per day of oil imports from the Middle East. However, oil minister Hardeep Singh Puri said India will take measures to safeguard domestic fuel supplies.

"We have been closely monitoring the evolving geopolitical situation in the Middle East since the past two weeks... we have diversified our supplies in the past few years and a large volume of our supplies do not come through the Strait of Hormuz now," Puri said on social media platform X. "Our Oil Marketing Companies have supplies of several weeks and continue to receive energy supplies from several routes. We will take all necessary steps to ensure stability of supplies of fuel to our citizens," he said.

He had earlier told news agency ANI that India would increase crude supplies from other sources if required. "We are in touch with all possible actors... It is our hope, and we all expect that the situation will result in calm and de-escalation rather than further escalation," he said.

(With agency inputs)