Explained: How a tanker crash near Strait of Hormuz impacts oil and India

The Strait of Hormuz is a narrow, 33-kilometre-wide maritime corridor between Oman and Iran but despite its size, it handles over 20 per cent of the world's oil supply

Two tankers caught fire after a collision in the early hours of June 17, 2025, near the Strait of Hormuz, one of the world’s most critical energy trade routes, raising alarm in oil and shipping markets already on edge. The incident, reported by Bloomberg, involved the Adalynn, sailing under the Antigua and Barbuda flag, and the Front Eagle, a Liberian-flagged vessel owned by Frontline Plc.

 

The crash occurred 24 nautical miles east of Khor Fakkan, UAE. Satellite images confirmed the fire, but all 24 crew members aboard the Adalynn were safely rescued, according to the UAE’s National Guard.

 

No foul play, but timing sparks concern

 

While both vessels caught fire, maritime security firms Vanguard Tech and Ambrey ruled out any hostile action. “No foul play is suspected,” Vanguard stated, though investigations are still underway.

 

 

Initial reports triggered brief panic across Asian and Middle Eastern trading desks, with speculation about a link to the ongoing Israel-Iran conflict. Though analysts later clarified it was a navigational mishap, the sensitive location and tense geopolitical backdrop stoked fears.

 

Ambrey initially issued a “war risk/sighting” alert but downgraded it to “situational awareness” shortly thereafter. Frontline Plc said a full probe would follow, stressing the incident was not tied to regional military activity.

 

Adding to the confusion, Front Eagle had experienced GPS jamming near Iran’s Assaluyeh days before the accident. While jamming has become more common amid rising tensions, experts confirmed that the crash occurred far from that interference zone.

 

Why is the Strait of Hormuz so critical?

 

The Strait of Hormuz is a narrow, 33-kilometre-wide maritime chokepoint between Oman and Iran. Despite its size, it facilitates over 20 per cent of the world’s oil supply and nearly a fifth of all global LNG shipments, primarily from Qatar.

 

In 2024, average daily oil flows through the strait stood at 20 million barrels — about a quarter of all seaborne oil trade. Saudi Arabia accounted for the largest share, exporting 5.5 million barrels per day through Hormuz, or 38 per cent of its total traffic, according to Vortexa data.

 

With only three-kilometre-wide shipping lanes in each direction, the strait is extremely vulnerable to disruptions. Any blockage, whether intentional or accidental, can raise global oil prices, spike shipping costs, and slow critical supply chains.

 

What this means for India’s oil security

 

India imports over 85 per cent of its crude oil and more than half its LNG from Gulf countries, making it heavily reliant on uninterrupted traffic through the Strait of Hormuz. In 2024, Qatar alone met 80 per cent of India’s LNG requirements.

 

A disruption could affect as much as 40 per cent of India’s crude intake, risking inflationary pressure and economic slowdown. A $10 increase in oil prices could widen India’s current account deficit by 0.55 per cent of GDP and push inflation up by around 0.3 per cent, economists estimate.

 

Beyond oil, Hormuz is also crucial for India’s exports to Gulf nations. Even temporary instability raises freight and marine insurance costs, hurting the competitiveness of Indian goods. To safeguard its interests, India continues naval deployments like Operation Sankalp to escort vessels and enhance maritime safety.

 

Israel-Iran tensions fuel fears of maritime fallout

 

With Israel and Iran trading direct drone and missile strikes since last week, fears are growing over a potential escalation at sea. Iran has previously threatened to block the Strait of Hormuz during times of conflict.

 

Although the recent fire appears unrelated to hostilities, the regional context cannot be ignored. Historically, flare-ups in this zone have spurred oil price surges and rerouting of cargo vessels. Insurance premiums often rise sharply, adding to trade and logistics costs.

 

For major importers like India, China, Japan, and South Korea, even perceived instability in Hormuz translates to real economic impact.