Be ready to face the oil shock! That is the warning emerging from the latest confrontation over the Strait of Hormuz: one of the world’s most strategically important maritime chokepoints, now a battlefield. Nearly 24 hours ago, US President Donald Trump posted on social media that “The Hormuz Strait is OPEN and will remain OPEN, with or without Iran.” He stated that the US was reinstating what he called the “Iranian blockade”, restricting Iranian vessels or customers while allowing other countries “fair and open use” of the waterway. Trump also proposed a 20% fee on cargo shipped through the Strait of Hormuz to reimburse the United States for providing maritime security, while Iran insisted that it would remain the sole guardian of the strategically vital waterway. Trump declared that the US would henceforth be known as “The Guardian of the Hormuz Strait”. The announcement has triggered legal, diplomatic and geopolitical questions. But for South Asia, the bigger concern is not only who controls Hormuz. It is whether countries dependent on imported energy are prepared for another global oil shock.

Hormuz matters

The Strait of Hormuz is the main export route for major energy producers, including Saudi Arabia, the United Arab Emirates, Kuwait, Iraq and Qatar. Around one-fifth of global oil consumption and a significant share of LNG shipments pass through this narrow maritime corridor. Even without a complete closure, any threat to shipping can increase crude oil prices, tanker insurance costs and freight charges.
Energy markets react not only to actual disruptions but also to uncertainty. This is why the latest US-Iran confrontation has consequences far beyond the Middle East. For months, Washington argued that the Strait of Hormuz must remain an open international waterway. The Trump administration criticised Iran’s reported threats to impose restrictions or tolls on commercial shipping, arguing that such measures would violate international law. US Secretary of State Marco Rubio stated in June that “no country is allowed to charge tolls or fees on an international waterway”, emphasising freedom of navigation. However, Trump’s proposal that the US receive a 20% reimbursement on cargo passing through the Strait introduces a new debate over maritime security and international law.

Under the United Nations Convention on the Law of the Sea (UNCLOS), international straits used for navigation are governed by the principle of transit passage. Any attempt by a single state to impose charges on commercial shipping is likely to face international scrutiny. But for energy-importing nations, the immediate concern is economic stability.

South Asia’s energy vulnerability

Talking about South Asia, it also remains highly exposed to global energy disruptions because most countries rely heavily on imported fuel. India, the world’s third-largest oil consumer, imports a large share of its crude oil needs. While India has strategic petroleum reserves and diversified suppliers, prolonged high oil prices would increase inflation, raise transport costs and expand its import bill. Pakistan faces greater vulnerability because of economic pressures and dependence on imported fuel. Any rise in oil prices quickly affects electricity generation, transport costs and household expenses. Bangladesh’s industrial economy also depends on reliable energy supplies. Higher oil and LNG prices would increase electricity generation costs, raise production expenses and affect export competitiveness, particularly in the garment sector. Sri Lanka remains particularly sensitive to external energy shocks. The 2022 economic crisis demonstrated how fuel shortages can affect every part of society. Although supplies have stabilised, Sri Lanka still depends heavily on imported petroleum. A fresh oil shock would increase import costs, pressure foreign exchange reserves and raise prices across the economy. The Maldives, as a tourism-dependent island economy, is also highly exposed. Imported fuel affects electricity generation, aviation costs, tourism operations and everyday living expenses. Even Nepal and Bhutan, despite their hydropower resources, depend on imported petroleum for transport, making them vulnerable to rising fuel prices.
China’s stake in Hormuz

China has also entered the debate because it is the world’s largest crude oil importer and a major buyer of Gulf energy. After Iran announced the closure of the Strait amid renewed confrontation with the US, Beijing called for the early restoration of safe and free passage. Chinese Foreign Ministry spokesperson Lin Jian said on Monday, “Restoring safe and free passage through the Strait of Hormuz as soon as possible serves the interests of all parties.” Even Russia is not very happy. The China-Russia are not a good combo if they get into this confrontation.

From geopolitics to the kitchen table

The impact of an oil crisis is eventually felt by ordinary people. It would hit the household and livelihood in numerous ways. It has already. The tax is raised, and higher import bills are seen. There is depreciation of local currencies too and finally, it’s the higher household expenses. Fuel price increases affect transport, food distribution, electricity generation and manufacturing. For families already dealing with economic pressures, another energy shock could quickly become a cost-of-living crisis.
Preparing for the next shock

The Hormuz crisis is a reminder that energy security is not only about securing fuel supplies. It is about building resilience. South Asian countries need stronger fuel reserves, LNG reserves, diversified energy sources, investment in renewables, resilient supply chains and greater regional cooperation. Platforms such as BIMSTEC could explore emergency energy arrangements and cooperation during global disruptions.
President Trump’s declaration may have been intended to reassure markets that Hormuz will remain open. But it has also raised larger questions about maritime security, international law and control over critical waterways. For those in South Asia, the most important question is not who becomes the “Guardian of Hormuz” but whether the region is ready for the next oil shock.
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The writer is an award-winning journalist and the Deputy Editor of Ceylon Today, Colombo
Originally published in the Daily Sun