Iranian Parliament votes to close vital Strait of Hormuz after the US Bombings; Know the significance and what it means for global oil prices & Indian Market
Strait of Hormuz, located between Iran and its Gulf Arab neighbours, stands as one of the most vital energy corridors. Approximately 20% of global oil and gas shipments-originating from major exporters like Saudi Arabia, Iraq, UAE, Qatar, Iran-pass through this narrow maritime passage each day.
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If the Strait of Hormuz were to be closed by Iran, it would have significant negative effects on the Indian stock market, especially in the short term. Here's a detailed breakdown of the potential impact:
🔥 What is the Strait of Hormuz?
A narrow chokepoint between the Persian Gulf and the Arabian Sea.
Handles ~20% of global oil trade (approx. 17–18 million barrels/day).
Key suppliers: Saudi Arabia, Iraq, UAE, Iran, Kuwait, and Qatar.
India imports over 85% of its crude oil, and a large share passes through this route.
🇮🇳 Impact on the Indian Stock Market
1. 📈 Crude Oil Price Surge
Brent crude could spike to $100+ if the Strait is closed even temporarily.
India's import bill will rise sharply → worsens fiscal deficit and CAD (Current Account Deficit).
This could trigger:
INR depreciation
Fuel inflation (petrol, diesel, LPG)
Interest rate concerns (RBI may delay rate cuts or turn hawkish)
2. 🔻 Sectoral Impact
🔔 Market Indices Reaction
NIFTY 50 / Sensex: Likely to fall sharply in initial reaction (2–3%+).
Bank Nifty: Vulnerable due to inflation/interest rate fears.
Volatility Index (VIX): Likely to spike → rise in option premiums.
🛑 Geopolitical & Risk Premium
Foreign Institutional Investors (FIIs) often withdraw from emerging markets during global crises.
India may face short-term capital outflows, adding pressure to equities and currency.
