Energy Prices May Spike if Hormuz and Bab al‑Mandeb Close
Mumbai, July 29 – A recent Careage Ratings briefing warns that simultaneous blockades of the Hormuz Strait and the Bab al‑Mandeb passage could send global energy prices soaring, with direct consequences for India’s economy. The report notes that India’s oil import bill is heavily tied to Hormuz, which supplies roughly 40% of the nation’s crude, alongside substantial LNG and LPG volumes.
In May 2026, a temporary disruption drove Brent crude to $115 per barrel. Analysts now project that a dual closure could lift Brent to $130‑135 per barrel, feeding inflation and threatening the stability of India’s energy supply.
The study links the surge to escalating hostilities in West Asia. Yemen’s Houthi rebels have threatened Red Sea shipping and have already targeted Saudi oil tankers. Iran is allegedly prompting the Houthis to seal the Bab al‑Mandeb if U.S. forces act against Iranian critical infrastructure.
Such a scenario would also force vessels to detour around the Cape of Good Hope, adding two to three weeks to transit times and inflating shipping costs. The ripple effect would be felt across sectors dependent on petroleum products and LNG, pushing production costs higher for energy‑intensive industries.
Senior Director Preeti Agarwal emphasized that even a brief shutdown could cause a rapid jump in global energy prices, with Brent reaching $130‑135 per barrel and LNG supplies under significant strain in both Asia and Europe.
Beyond energy, the report cites anticipated rises in marine‑insurance premiums, port congestion, extended shipping routes and higher cargo‑handling charges, all of which would tighten the global supply chain.
While large corporations may cushion the blow through diversified sourcing and robust bargaining power, smaller traders with limited price‑pass‑through ability could encounter shrinking margins, increased working‑capital needs and possible cash‑flow crises.
The briefing calls on Indian businesses to prepare contingency strategies, diversify supply lines and consider financial hedges to shield against volatile energy and freight markets.