With the US and Israel bombing Iran and reportedly eliminating at least two of its top officials, energy experts have expressed concerns over the latest crisis in West Asia to result in an immediate increase of about 5-10% in global oil prices. With the global oil market already showing volatility in the wake of the latest conflict in the region, experts are not ruling out the likelihood of a temporary disruption or a closure of the Strait of Hormuz—one of the key waterways of the world that links the Gulf to the Indian Ocean, which Iran has used as a leverage in times of crisis in the past. The latest information is that Iran is moving to block Hormuz.
The US Energy Information Administration (EIA) describes it as “one of the world’s most important oil chokepoints” from which about one-fifth of the global oil and petroleum product consumption flows, averaging 20 million barrels per day in 2024. Iran had briefly closed parts of the Strait of Hormuz recently to conduct live-fire naval drills codenamed “Smart Control of the Strait of Hormuz”—a move that coincided with the second round of indirect talks between Iran and the US held in Geneva.
The Strait has been used as a leverage by Iran at several crucial points of history including during the 1980s Iran-Iraq war, the 2012 sanctions on Iran and also during the 12-day war between Iran and Israel in June 2025.
On June 23, 2025, Iran’s parliament had voted in support of closing the Strait but the country’s National Security Council never activated it.
The escalation of the latest conflict between Iran and Israel has signalled that it could spiral into a prolonged war but crude prices had firmed up by 10% ever since the US started positioning military assets in the region.
Speaking to The Sunday Guardian, Sumit Ritolia, Lead Research Analyst, Refining and Modelling at commodity market analytic firm Kpler said that while crude prices have already firmed up, a further rise of 5-10% is expected to be seen in oil prices when the markets open Monday.
He, however, said that while a temporary closure of the Strait by Iran was a possibility, the probability of sustained closure remains low, as Gulf producers—including Iran—are heavily dependent on uninterrupted export revenues.
“Iran itself relies substantially on crude sales to China, making prolonged self-disruption economically counterproductive,” he said.
He said that the disruption is likely to be short-lived.
“If we observe signs of reduced crude flows or lower transit volumes through the Strait of Hormuz—or even in the extreme case of a temporary blockade—the disruption is likely to be short-lived. Given the US military presence in the region and the combined maritime capabilities of GCC (Gulf Cooperation Council) countries, any major obstruction would probably be addressed within a few days rather than becoming a prolonged event,” he said.
‘INDIA ALREADY DIVERSIFYING CRUDE SOURCING’
While a disruption in oil transit through the Strait of Hormuz disruption would create immediate volatility, India’s diversified sourcing strategy and the presence of alternative barrels in nearby waters reduce the risk of a sustained supply crisis, say experts.
Keeping past experiences in mind and given that it is already attempting to balance its fuel requirements with expectations of its trade partners like the US, the Middle Eastern countries and Russia, India has already been attempting to diversify its crude sourcing.
India currently imports roughly 2.6 mbpd of crude that transits the Strait of Hormuz, accounting for a significant share of its total intake given its reliance on suppliers such as Iraq, Saudi Arabia, the UAE and Kuwait.
Kpler estimates that any disruption to the Strait would likely cause short-term supply tightness, higher freight and insurance costs, and upward pressure on crude prices, thereby impacting India’s import bill.
“That said, the probability of a sustained closure remains low, as Gulf producers—including Iran—are heavily dependent on uninterrupted export revenues. Iran itself relies substantially on crude sales to China, making prolonged self-disruption economically counterproductive,” said Ritolia.
RUSSIAN OIL?
He added that while the Indian government has already been actively working on diversifying crude sourcing, the barrels of Russian oil currently floating in the Indian Ocean and Arabian Sea region, partly due to reduced Indian imports over the past few months, can act as near-term optional supply.
Indian refineries had decreased their purchase of Russian oil over the past few months with US President Donald Trump even stating that India would not purchase Russian oil in the wake of the finalisation of the India-US trade deal.
However, refineries have been lowering their sourcing of Russian oil only gradually and several tankers of Russian oil are still idling in the waters due to tightening sanctions.
“While incremental volumes can be secured from regions such as Latin America or the US, these barrels come with longer voyage times and higher freight costs. Middle Eastern cargoes typically arrive in India within about five-seven days, making them logistically efficient and strategically important. Another important consideration is the availability of Russian crude. A significant number of Russian barrels are currently floating in the Indian Ocean and Arabian Sea region, partly due to reduced Indian imports over the past few months. These floating volumes effectively act as near-term optional supply,” said Ritolia.
Kpler analysts say that in a scenario where Middle Eastern imports become constrained or show signs of disruption, Indian refiners—potentially with policy backing—could pivot back to Russian cargoes relatively quickly, which may provide India with an additional buffer against short-term geopolitical shocks.
