OPINION | Beyond Hormuz: India's maritime dilemma as Iran-US war sparks geopolitical storm in Indian Ocean

In the waters around the Strait of Hormuz, a chokepoint through which nearly a third of global seaborne crude flows daily, nine commercial vessels have been attacked in recent days, with responsibility unclear in several cases. The Islamic Revolutionary Guard Corps (IRGC), however, openly claimed two of the incidents: a missile strike on the Stena Imperative and a drone attack on the Athe Nova. Projectiles continued to rain down on merchant ships, and the 1,740‑TEU Safeen Prestige was hit above the waterline, triggering an engine fire as it transited the narrow corridor north of Oman’s Musandam Peninsula.

Amid the chaos, conflicting explanations circulating, the IRGC declared full control over the Strait of Hormuz, warning that any vessel attempting passage risked being struck by missiles or stray drones. Iranian commanders emphasised that the country retained both the intent and capability to target oil tankers, raising the spectre of a prolonged environmental and economic catastrophe should a major spill occur in the confined waters of the Gulf.

Trump has sought to project control over the situation, insisting that the strait despite Iranian claims to the contrary was not closed to international shipping. According to him, Iran had been preparing to strike first, and the United States had acted to prevent a wider catastrophe.

Hundreds of tankers now find themselves effectively trapped, unable or unwilling to risk the transit out of the Gulf. Energy markets reacted immediately. Brent crude surged, at one point spiking nearly 9 per cent in a single day before settling slightly lower. Freight rates for Very Large Crude Carriers (VLCCs) and suezmaxes skyrocketed to theoretical earnings of $400,000 per day, though few fixtures were actually concluded because insurers had begun withdrawing war‑risk coverage across the region. Without insurance, even the boldest shipowners hesitated. A single missile strike could mean not only the loss of a vessel and cargo but also financial ruin.

Trump, facing mounting pressure as global markets reeled and his own claims of economic revival came under threat ahead of the midterm elections later in the year, moved quickly to calm investor jitters. He argued that the United States could stabilise the situation in the Gulf and prevent further economic fallout. On March 3, he announced a new financial backstop for vessels operating in the Gulf. He stated that he had ordered the United States Development Finance Corporation to step in with political risk insurance and guarantees designed to shield maritime commerce from the escalating conflict; Trump said, “I have ordered the United States Development Finance Corporation to provide at a very reasonable price political risk insurance and guarantees for the financial security of all maritime trade. If necessary, the United States Navy will begin escorting tankers through the Straits of Hormuz.”

This insurance vacuum echoed earlier crises, such as the Russia–Ukraine conflict, where property and marine insurers invoked war and hostile‑acts exclusions, leaving companies exposed. In the Gulf, the lack of war‑risk coverage created a dangerous gap. Political risk insurance, normally a niche product, has suddenly become essential, offering protection where traditional marine policies no longer applied. It covers scenarios ranging from forced abandonment of assets to losses incurred without direct physical damage, such as when companies must evacuate personnel or shutter operations due to deteriorating security conditions.

Yet the question remained whether shipowners would accept the offer. Memories of attacks during the Red Sea crisis that began late 2023 are fresh, and the risk calculus has shifted dramatically. Even with US naval escorts, the possibility of miscalculation or deliberate escalation looms large. It remains to be seen if American guarantees can eventually coax vessels back into the strait.

Meanwhile, the crisis radiated outward. Energy infrastructure in Saudi Arabia, Qatar, and other Gulf states came under threat, signalling that the conflict was not confined to maritime lanes alone. Container shipping routes were also disrupted. Vessels travelling between Asia and Europe abandoned the Suez Canal route entirely, opting instead to sail around the Cape of Good Hope, a detour that adds 10 days to transit times and inflates costs for global supply chains already under strain.

The cumulative effect was a global economic shockwave: rising energy prices, surging freight costs, and mounting uncertainty about the security of the world’s most important shipping corridors. The Indian Ocean, long considered a relatively stable maritime domain, now found itself at the heart of a geopolitical storm.

The sinking of an Iranian warship by a United States submarine in international waters off Sri Lanka’s southern coast marked a dramatic and dangerous escalation in an already volatile regional conflict. The attack, confirmed by the US Defense Secretary Pete Hegseth, was described as the first direct strike of its kind since the Second World War. Sri Lankan authorities recovered dozens of bodies and rescued 32 sailors from the IRIS Dena, which had only recently participated in an international naval exercise hosted by India. The vessel’s destruction, just outside Sri Lanka’s territorial waters, instantly widened the geographic scope of the confrontation between Washington and Tehran, pulling the Indian Ocean Region (IOR) into the centre of a spiralling crisis.

As the self‑declared architect of the SAGAR doctrine (Security and Growth for All in the Region), India has long styled itself as the primary guardian of a rules‑based maritime order in the Indian Ocean. Yet, the sinking of an Iranian vessel and its broader inability to safeguard commercial shipping virtually on its doorstep expose a stark mismatch between rhetoric and capability. The crisis has unfolded not in distant waters but in the very maritime neighbourhood where India claims influence, and its muted response risks signalling that its strategic commitments are aspirational slogans rather than enforceable guarantees.

At a moment when tankers are immobilised, insurers are fleeing, and the US is shaping outcomes in the IOR, India’s absence from meaningful crisis management is conspicuous, and damaging. Unless New Delhi can demonstrate that its leadership in the Indian Ocean is backed by real capacity and the political will to act under pressure, others will define the region’s security architecture in its place.

Vaishali Basu Sharma is a security and economic affairs analyst.

Opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.