In This Economy — Strait Talk: Oil On Edge, Flights In Flux, And The World Holding Its Breath
Oil briefly spiked to a five-month high. Asian markets slipped. And in India, officials are on red alert—trying to keep oil flowing, exports moving, and diplomacy balanced on a knife’s edge.
Happy Tuesday, readers.
This week, the Strait of Hormuz isn’t just a dot on the map—it’s ground zero for a global shockwave. After the US' airstrikes on Iranian nuclear sites, Tehran is threatening to shut the world’s most critical oil corridor. And that’s not all.
Airlines are scrambling as West Asian airspace turns into a no-go zone. Gulf carriers and Indian airlines have already begun rerouting or delaying flights.
Oil briefly spiked to a five-month high. Asian markets slipped. And in India, officials are on red alert—trying to keep oil flowing, exports moving, and diplomacy balanced on a knife’s edge.
Almost half of India’s crude oil comes through Hormuz. If Iran shuts it down, prices will surge. Inflation will rise. And India’s already-complicated ties with both Iran and Israel may take a serious hit.
Meanwhile, Washington is working backchannels to push for a ceasefire, hoping to cool tensions before the world’s energy and aviation systems take a deeper hit.
On to the newsletter.
What’s At Stake For India?
India relies on the Gulf for most of its oil—from Iraq, Saudi Arabia, and the UAE—all of which flows through Hormuz. Even with rising imports from Russia and the U.S., nearly 47% of India’s oil still moves through this chokepoint.
Oil Minister Hardeep Singh Puri said India has enough stockpiles and alternative supply lines. But analysts cautioned that if the Strait shuts, crude could hit $100–$120 per barrel, triggering inflation, subsidy stress, and a widening fiscal deficit.
Already, roughly Rs 3,000 crore worth of basmati rice exports to Iran are now stuck, with port operations at Bandar Abbas suspended. That’s a big blow for a country that sent over 1 million tonnes to Iran just last year.
Why Hormuz Isn’t Just Iran’s Problem
Over 20 million barrels of oil and one-third of the world’s LNG pass through Hormuz daily.
Alternatives like Saudi Arabia’s East-West pipeline or the UAE’s Fujairah terminal can’t carry the full load.
Mines, drones, or naval tension could jack up shipping costs, rattle insurance markets, and slow global trade.
India’s Plan B
Top sources in policy corridors told your author that New Delhi is holding low-key talks with Russia, Qatar, and African oil suppliers to bypass Hormuz risk.
Besides, if crude breaches the $105/barrel mark, it could also consider reducing the excise duty on petrol & diesel to balance the impact.
Economists say India can weather crude at $85 a barrel, but beyond that, fuel prices, the rupee, and interest rates could all feel the burn.
Strategic Straits: Small Passages, Big Stakes
Let's look at the choke points that move the world.
Suez Canal (Egypt): 12% of global trade. One ship blocked it in 2021—cost the world $10B a day.
Panama Canal: Drought-hit, slowing ships and snarling supply chains.
Bab el-Mandeb: Gulf-to-Europe oil route. Piracy and Red Sea tensions make it risky.
Malacca Strait: Asia’s energy highway. India and China rely on it—100K ships yearly.
Turkish Straits: Lifeline for Russian grain and oil. Flashpoint in Black Sea conflicts.
It’s About Oil, Not Just Ideology
This isn’t just about religion or revenge. The Iran–Israel rivalry is a power struggle over who controls the Middle East—and its energy riches.
The U.S. backs Israel not out of moral alignment but strategic calculus: securing oil routes, military leverage, and regional dominance.
Iran? It’s fighting for a say in that order—and Hormuz is its bargaining chip.
Bottom line
India has walked a fine line in West Asia—friends with Iran, strategic with Israel, and energy ties with the Gulf. But if Hormuz goes dark, neutrality won’t cut it.
The oil won’t wait.
And the next time you fill up your tank or book a flight, don’t be surprised if you feel the pinch.
We’ll keep tracking this crisis in real time.
FEATURE FIVE
As India's power sector eyes achieving 50 gigawatts of nuclear energy capacity by 2047, Vinayak Chatterjee, founder and managing trustee of The Infravision Foundation, believes the country's nuclear power ambitions are poised at a critical inflection point, he tells Vishwanath Nair.
The Directorate General of Civil Aviation is set to undertake a detailed review of Air India, with a 10-member team scheduled to visit the airline’s headquarters in Gurugram on Tuesday. The three-day audit will run from June 24 to 26, a top government official told Sesa Sen.
Authorities are closely tracking oil trends, given their impact on inflation and growth, top government told me, after Iran parliament approved closure of Strait of Hormuz, an extremely important supply passage of oil.
Paytm’s parent company — One97 Communications Ltd — is learnt to have filed a compounding application with the Reserve Bank of India in an effort to settle an ongoing case involving alleged violations of the Foreign Exchange Management Act., according to people familiar with the matter.
Air India flight bookings have dropped by 30-35% in the six days following the June 12 crash, disrupting travel plans during the summer holiday and international conference season, Aishwarya Patil and Sesa Sen report.
CAUGHT MY EYE
Air India has faced intense scrutiny since a London-bound plane crash in Ahmedabad roughly two weeks ago. The airline has now reported that five passengers and two crew members fell ill on a flight from London to Mumbai on Monday. Upon landing, two passengers and two cabin crew members who remained unwell were taken to a medical facility for further assessment, according to an Air India statement.
Signing off – until the next Strait Talk!!
Shrimi
