Six months into US-Iran war: Strait of Hormuz crisis, global economic shock and India’s strategic test

Six months into the US-Iran war, the conflict has shifted beyond its initial military and nuclear objectives. Executive Editor of Hindustan Times, Shishir Gupta, described it as a strategic stalemate that now encompasses control of sea lanes, energy flows, and American power's credibility in West Asia. The immediate impact is Iran's continued military resilience despite sustained American operations, evidenced by attacks on an Omani tanker, US strikes on Iranian missile launchers, and an Iranian attack on a Jordanian air base.

Tehran's ability to impose costs on adversaries is significant due to its possession of intermediate-range missiles capable of reaching targets 1,500 to 2,000 kilometres away. Iran also retains the capacity to threaten maritime movement through mining operations and missile attacks in and around the Strait of Hormuz. This poses a major economic risk, as even limited disruption can significantly raise insurance premiums, force vessel rerouting, and intensify global energy market fears.

Iran's Islamic Revolutionary Guard Corps and Quds Force continue to operate, while its network of regional partners and armed groups remains active across West Asia. The conflict has not resulted in a regime-changing outcome, leaving Iran intact in its strategic posture. For Washington, this creates a difficult question regarding whether original objectives have been achieved.

The Strait of Hormuz has become the most consequential pressure point, central to oil and gas shipments from the Gulf. Any perception of unsafe commercial traffic can quickly affect prices globally. The US is exploring shipping routes closer to Omani waters, but Iranian missile capabilities can threaten vessels even if they avoid Iranian-controlled islands.

Iran's asymmetric leverage lies in the possibility of missile strikes, mines, or attacks on tankers, which can make insurers, shipping companies, and oil buyers cautious without permanently shutting the waterway. This creates a ripple effect, causing higher freight charges, insurance costs, and energy prices, which in turn raises inflationary pressures. The maritime danger extends beyond Hormuz, with the Red Sea and Bab el-Mandeb also vulnerable to attacks by the Houthis, further complicating the Suez Canal route.

For India, the conflict is a direct economic and supply-chain risk due to its import-dependent nature. The ongoing crisis is reshaping the wider balance of power, with China emerging as the principal strategic beneficiary. Iran's economic survival remains closely linked with its relationship with China, as Tehran continues to export a substantial share of its oil to China despite sanctions.

This complicates efforts to economically isolate Iran, as sanctioning smaller companies may impose costs, but the challenge becomes more serious when the country's principal economic partner is a major global power.