The joint US-Israeli attack on Iran and the Iranian counter-attack have pushed West Asia into another cycle of conflict. The theater of conflict changes, but the conflict in West Asia does not end. Fragility increases. Clouds of uncertainty are looming on the West Asian horizon. What is more important is the export of energy. The supply chain has been seriously affected. The Strait of Hormuz is the most affected. Iran exerts its geopolitical influence around the strait. The supply chain chokepoint is under Iranian control. Iran makes it a weapon. The Strait of Hormuz reportedly sees more action and reaction, as it controls oil exports. The Islamic Revolutionary Guard Corps (IRGC) has reportedly closed the strait to ship traffic, particularly from the US, Israel, Europe and other Western allies. The movement of commercial ships has been halted due to fears of a possible attack by the IRGC. The impact of this shutdown has affected the energy market and increased energy prices. The Global South will suffer an energy shock. The global recession is soon going to hit the common people. Symptoms are visible. If the shutdown continues, energy prices could rise to between $145 and $185 per barrel of crude oil. Market instability will continue.
The Strait of Hormuz is a narrow sea channel that connects the Persian Gulf to the Gulf of Oman and the Arabian Sea. Its length is about 100 miles and width is 21 miles. The coastal states of the Strait of Hormuz are Iran, Oman and the United Arab Emirates. It is an important transit route for oil and gas exports from the Persian Gulf. It is an oil chokepoint that determines the global economy. The global economy is dependent on energy. The military increase in the Strait of Hormuz has made the situation critical. Shipping chokepoints have once again gained importance. It has been placed at the center of turbulent geopolitics through vital shipping routes. The Strait of Hormuz is Iran’s Trojan horse. It allows passage of shipments of up to 20 million barrels per day. This accounts for about one-fifth of global petroleum consumption. About 20% of the world’s liquefied natural gas (LNG) from Qatar passes through the strait. Saudi Arabia and the UAE’s bypass pipelines cannot handle the load in the event of a blockade in the Strait of Hormuz. The lack of strong alternatives raises fears of a potential escalation of conflict, which could lead to supply chain and energy crises. Iran understands the geopolitics of the Strait. This is a fertile field for psychological pressure tactics. Suppressing the supply chain is the IRGC’s main objective and a means of taking revenge on its adversaries.
Asian energy vulnerabilities may increase as 80% of oil passes through the Strait of Hormuz. Energy is transported through the strait to Asia’s major powers and energy dependent countries, China, India, Japan and South Korea. Oil prices are projected to rise if the conflict continues beyond a certain point. There are already signs of a bounce back. Prolonged conflict could lead to an energy crisis and global recession.
The Gulf countries that depend on the strait to export oil and gas to the global market are Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Qatar, Iran, and Bahrain. Saudi Arabia exports 5.3 million barrels a day through this sea route, although it has an east-west pipeline to the Red Sea. But this pipeline cannot be completely trusted. It uses the strait for effective supply and easy access. Iraq’s southern exports depend on the strait, although there are pipelines through Türkiye to northern areas. The UAE’s Habshan-Fujairah pipeline is at capacity limits. It relies on the strait for exports of 1.8 million barrels per day. Kuwait has no option. Its dependence is entirely on the strait. Qatar is also mostly dependent on waterways. Iran most needs the strait to supply China with 1.5-1.6 million barrels of oil per day. Iran, which is facing sanctions, considers China as the only source of its energy exports. Therefore, Iran’s dependence on the strait is irreplaceable. Bahrain also has no option. Sea route is its only export route. 50 percent of China’s oil imports come through this route. 60 percent of India’s LNG and 30 to 50 percent of crude imports pass through this route. There will be rapid loss in crude. If the quarrel continues for a long time, there will be more sorrow. South Korea depends on the strait for 80% of its energy needs. As the conflict escalates, their vulnerabilities increase. Major companies such as Maersk, MSC and Hapag-Lloyd have suspended transit. They re-route via the Cape of Good Hope, increasing transit time and costs. Marine insurance premiums have started increasing. The cost of super tankers has also increased rapidly. This complicates the ground situation.
The Strait is Iran’s weapon of asymmetric warfare. Iran cannot win through conventional war. It cannot compete with the technologically sophisticated and powerful American-Israeli military. This will play a psychological game to prolong the war. America is impatient to end the war. Iran understands America’s impatience. This will prolong the war through asymmetric means. Iran will use this chokepoint to exert psychological pressure. This soft weapon is called psychological erosion. Iran’s IRGC reportedly announced no ship movements in the strait. Critical energy corridors pose a security threat and the potential for sudden bursts of kinetic action. Permanent closure of the strait would also harm Iran and its economy. Its oil supply to China will be affected. The blockade will impose restrictions and hardship. But if the Strait of Hormuz is closed, Iran’s poor economy will collapse. This will be unfavorable for Iran. He is left with no option. Its only alternative is to adopt asymmetric means. Economic coercion through blockade of the strait will harm Iran and the world. This reportedly allows Chinese and Russian ships to transit the waterways of the strait. This selective route complicates the matter. The United Nations Convention on the Law of the Sea (UNCLOS) states that no coastal state can unilaterally block international transit routes. The United States maintains a free navigation approach to ensure uninterrupted energy supply. Selective entry of Chinese and Russian ships as well as restrictions on other ships will increase tensions. The US targets Iranian assets along the strait to prevent the IRGC from completely disabling the transit route.
In addition to economic pressure by closing the strait, Iran has reportedly targeted Israel (Beit Shemesh, Haifa and Tel Aviv), United Arab Emirates (Jebel Ali Port, Burj AI Arab Hotel and Palm Jumeirah), Saudi Arabia (US Embassy in Riyadh and Saudi Aramco Refinery), Bahrain (US Naval Base in Manama and the Port of Bahrain), Kuwait (Kuwait International Airport and US Embassy), Qatar (LNG operating facilities), Iraq (Erbil International Airport and America) is attacked. Consulates), Oman (Duqm and Salalah), Azerbaijan, Cyprus (British airbase) and Jordan are using drones and missiles after the joint US-Israeli strike. This led to costly interceptor operations, downing of Iranian drones, offensive attacks on Iranian facilities, airspace closures, formal condemnations, and mediation meltdowns. These countries can use Article 51 of the UN Charter to respond militarily. Despite retaliatory measures, Iran opts for shadow war and stealthy conduct. The conflict will be unfavorable. Anarchy is its measured strategy. This will lead to regional instability and economic and political costs for Iran’s adversaries. The cost asymmetry involves the use of low-cost Shaheed-136 drones and forces Israel and the US to deploy Arrow interceptors and Patriot systems. The latter cost $2 million to $4 million per shot, while the former cost $20,000 to $50,000. Iran targets digital infrastructure in Bahrain and the United Arab Emirates to disable digital services, causing disruption as a soft economic target. It attacks Qatari LNG facilities and Saudi Aramco refineries to paralyze energy. Iran’s launch platforms are protected by underground tunnel complexes. This maintains Iran’s retaliatory capability. Iran has decentralized command down to the rank and file to pursue asymmetric warfare. Its ideological indoctrination for more than four decades has created a fighting force that is invincible and adept at asymmetric warfare. Its objective is to trap the opponent in a maze of inconclusive war.
The Iran-US-Israel war impacts India, especially its trade and energy. Its largest diaspora is in West Asia and their security is India’s primary concern. The Strait of Hormuz is important for India, as it transits 50% of India’s crude oil imports and 60% of its LNG imports. The increase in fuel prices will impact Indians, Indian industry and other important sectors. India is an energy-dependent country. Energy and inflation are dependent on each other. The risk of inflation will fall on the poor. Freight costs impact the fertilizer industry. This will affect farming. Indian Rupee is falling because recession is in front of us. Shipments of basmati rice and electronic exports to GCC countries have been stuck due to supply chain disruptions. Shipping costs are skyrocketing. Fertilizer imports from the GCC, especially potash and nitrogen, are stuck due to supply chain issues. Operation Sindhu is underway to evacuate Indian migrants and citizens from conflict-torn areas. International flights are canceled due to airspace closure. Changing routes to avoid Iranian airspace comes at a higher cost. Increase in aviation fuel prices increases airfares. The aviation industry is facing challenges. However, uncertainty remains large. Given Iran’s ability to continue the war in an asymmetric manner, it is difficult to predict a formal end to the war.
This article is written by Jajati K Patnaik, Professor, Center for West Asian Studies, School of International Studies, Jawaharlal Nehru University, New Delhi and Chandan Panda, Professor, Central University of Karnataka, Karnataka.
