Why in News?
Iran announced a temporary closure of parts of the Strait of Hormuz to conduct live-fire naval exercises. The move has raised concerns over global energy supply and maritime security.
Strait of Hormuz:
Strait of Hormuz is narrow waterway separating Iran (north) from the Musandam Peninsula (an exclave of Oman) and the United Arab Emirates (south).
- World’s Most Vital Chokepoint: It is the only sea passage from the Persian Gulf to the open ocean.
- Energy Lifeline: Approximately 20-25% of the world’s seaborne oil and 20-30% of global Liquefied Natural Gas (LNG) pass through it daily.
- Major Exporters: Key OPEC members like Saudi Arabia, Iraq, Kuwait, UAE, and Iran rely on it to export crude. Qatar, the world’s leading LNG exporter, sends nearly all its LNG through this strait.
Significance for India
- Energy Security: India is highly dependent on this route, as nearly 40% of its crude oil imports and 54% of its LNG imports pass through the strait.
- Economic Impact: Any disruption leads to immediate spikes in global oil prices, impacting India’s Current Account Deficit (CAD) and fueling domestic inflation.
