STRAIT OF HORMUZ
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The Strait of Hormuz is a strategically significant and narrow maritime passage situated between Iran and Oman, serving as a link between the Persian Gulf, the Gulf of Oman, and the Arabian Sea. The U.S. Energy Information Administration (EIA) has labeled it as the world’s most vital oil transit chokepoint, through which nearly 20% of global liquid petroleum fuels and a substantial portion of LNG trade pass. In May, more than 45% of India’s crude oil imports were estimated to have transited through this strait. Given that India is the third-largest consumer of crude oil globally and imports over 85% of its oil needs, the strait plays a crucial role in its energy security.
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Data from the commodity analytics firm Kpler indicates that, as of June, India has been importing over 2.2 million barrels per day (bpd) of crude oil from Russia, which constitutes more than 41% of its total oil imports.
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While oil imports from the U.S. have shown a steady rise, supplies from West Asian nations such as Iraq, Saudi Arabia, the UAE, and Kuwait have remained relatively consistent. Many of these shipments were likely planned prior to the recent escalation in tensions between Israel and Iran, and therefore, may not reflect the impact of the current geopolitical developments.
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Over the past two to three years, India has notably adjusted its oil import strategy. Russia has emerged as India’s top crude supplier, overtaking traditional exporters from West Asia. Importantly, Russian oil bypasses the Strait of Hormuz, as it is mainly transported via alternative sea routes like the Suez Canal and Red Sea, and sometimes through the Cape of Good Hope or Pacific Ocean routes.
- The Strait of Hormuz is commonly considered the most critical maritime chokepoint in the world. It links the Persian Gulf with the Gulf of Oman and the Indian Ocean, serving as a major export corridor for regional oil producers.
- At its narrowest point, it measures only about 21 nautical miles (38 km) across. Under typical conditions, nearly 21 million barrels of oil—around one-fifth of global consumption—flow through it daily.
- Alongside crude oil, substantial quantities of liquefied natural gas from Qatar and the UAE are transported via this passage.
- A significant share, close to 80%, is destined for Asian markets, making countries like India, China, Japan, and South Korea heavily reliant on this route.
- Apart from Hormuz, international trade depends on a few other strategically vital maritime passages, including the Strait of Malacca, Bab el-Mandeb Strait, Suez Canal, and Panama Canal.
- The Strait of Malacca lies between the Malay Peninsula and Indonesia’s Sumatra island and represents the shortest maritime route connecting the Indian Ocean with the South China Sea. This makes it indispensable for trade flows linking West Asia, Africa, and East Asia.
- The Bab el-Mandeb Strait is positioned between the Arabian Peninsula and the Horn of Africa.
- It serves as the southern entrance to the Red Sea, a necessary transit point for vessels heading toward the Suez Canal and onward to the Mediterranean, thereby forming a crucial segment of Asia–Europe trade routes.
- The Suez Canal, a man-made channel across Egypt, connects the Red Sea to the Mediterranean Sea, significantly reducing travel time by eliminating the need to circumnavigate Africa.
- Further west, the Panama Canal cuts through the Isthmus of Panama, linking the Atlantic and Pacific Oceans. This strategic shortcut facilitates trade between Asia, the Americas, and Europe, removing the necessity of sailing around South America
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India’s current oil procurement approach already demonstrates a diversified and risk-mitigated strategy, especially in light of uncertainties in West Asian oil routes, with Russian crude now making up the largest share of India’s import basket.
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After recent U.S. air strikes targeting Iranian nuclear sites, Iran’s parliament passed a resolution on Sunday advocating the closure of the Strait of Hormuz, a vital corridor for global oil transportation. The final decision on this move now lies with Iran’s Supreme National Security Council.
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Although Iran has repeatedly issued threats in the past to shut the strait, it has never acted on them. Even in the present context, industry analysts consider the likelihood of an actual blockade to be low. Nevertheless, the increased risk perception surrounding the potential closure is expected to trigger global alarm, including in India, by raising concerns over the security of oil and gas supplies and potentially driving up global energy prices.
- The Israel-Iran conflict poses a significant threat to global oil and gas flows due to the geopolitical sensitivity and strategic location of the region. At the heart of this issue lies the Strait of Hormuz—a narrow but crucial maritime passage through which nearly 20% of the world’s petroleum and a substantial share of liquefied natural gas (LNG) are transported.
- Iran borders this strait and has, over the years, repeatedly threatened to block it during periods of heightened tension, including in response to military actions or sanctions.
- When hostilities between Israel and Iran escalate—such as through air strikes, proxy conflicts, or cyber warfare—it increases the likelihood of retaliation from Iran that could involve disrupting maritime traffic in the Strait of Hormuz.
- Even if Iran does not fully close the strait, the mere threat or perception of such an action is enough to cause volatility in global energy markets. Tanker insurance rates rise, shipping routes are reconsidered, and countries heavily dependent on oil imports, like India, become increasingly vulnerable to supply disruptions and price shocks.
- Furthermore, any military conflict in this region risks damaging key infrastructure such as refineries, pipelines, or export terminals in the broader West Asian region.
- This would constrain oil production and distribution, affecting both the availability and price of crude oil and gas worldwide. Global markets respond quickly to these risks, often resulting in immediate spikes in prices due to concerns over supply security.
- In summary, the Israel-Iran conflict amplifies the risk to global oil and gas flows by potentially destabilizing a region that is central to global energy supply chains. It heightens fears of supply disruptions, increases market speculation, and threatens the economic stability of energy-importing countries, making it a matter of both geopolitical and economic concern
The flow of vessels through major international chokepoints is largely regulated by the United Nations Convention on the Law of the Sea. According to its provisions, straits that are used for global navigation fall under the concept of “transit passage,” which permits ships and aircraft from all countries to move through them freely, continuously, and without interference.
At the same time, coastal states bordering these straits are allowed to introduce regulations related to safety or environmental protection. However, they are not permitted to block passage or apply discriminatory restrictions on specific vessels. While this freedom of navigation is widely accepted in international law, its practical implementation often depends on the naval capabilities of states and the level of cooperation among them
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For Prelims: Strait of Hormuz, Persian Gulf, Energy Information Administration (EIA), liquefied natural gas (LNG)
For Mains: General Studies II: Effect of policies and politics of developed and developing countries on India’s interests.
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Previous Year Questions
1.Which one of the following straits is nearest to the International Date Line? (UPSC CSE 2008) (a) Malacca Strait (b) Bering Strait (c) Strait of Florida (d) Strait of Gibraltar Answer (b) The International Date Line (IDL) roughly follows the 180° longitude, which lies in the Pacific Ocean, deviating slightly to accommodate international boundaries. The Bering Strait lies between Russia and Alaska, and it is very close to the 180° meridian, making it the closest strait to the International Date Line. Here's why the other options are incorrect:
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WHOLESALE PRICE INDEX (WPI)
The Ministry of Commerce and Industry on Monday released the new series of the Wholesale Price Index (WPI) with an updated base year of 2022-23 and wider ambit of goods measured. Due to the base year update, a historical comparison further back than April 2024 is not available. The May 2026 inflation rate is the highest since at least then.
2. What is the Wholesale Price Index(WPI)?
- The Wholesale Price Index (WPI) is a measure of the changes in the prices of goods sold and traded in bulk by wholesale businesses to other businesses or retailers. It is one of the key indicators used to measure inflation and economic performance in a country.
- WPI tracks the average price changes of goods at the wholesale level, providing insights into inflationary pressures in the economy.
- It includes various categories of goods such as agricultural products, industrial raw materials, fuel and power, and manufactured goods.
- Governments and policymakers use WPI data to monitor inflation trends, formulate monetary and fiscal policies, and assess the overall health of the economy.
- It serves as a crucial tool for businesses to adjust pricing strategies, forecast costs, and make informed decisions regarding production and investment
3. Importance of WPI
The Wholesale Price Index (WPI) holds several significant roles in economic analysis and policymaking:
- WPI is a key indicator used to measure inflationary pressures in the economy. By tracking changes in the prices of goods at the wholesale level, it provides insights into the direction and magnitude of inflation. This data is crucial for policymakers in formulating monetary and fiscal policies to maintain price stability
- WPI serves as a barometer of economic performance, reflecting changes in production costs, input prices, and overall market conditions. Fluctuations in WPI can indicate shifts in supply and demand dynamics, business confidence, and economic activity levels
- Governments and central banks rely on WPI data to formulate and adjust monetary and fiscal policies. By assessing inflationary trends captured by WPI, policymakers can make informed decisions regarding interest rates, money supply, taxation, and government spending to achieve macroeconomic objectives such as price stability, economic growth, and employment generation
- Businesses utilize WPI as a tool for forecasting production costs and adjusting pricing strategies. By monitoring changes in wholesale prices of goods, companies can anticipate future cost pressures, optimize supply chain management, and make pricing decisions to maintain profitability and competitiveness in the market
- WPI data is also crucial for analyzing trends in international trade. Changes in wholesale prices can affect export competitiveness, import demand, and trade balances. Policymakers use WPI information to assess the impact of exchange rate fluctuations, trade policies, and global economic conditions on domestic industries and trade relations
The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is one of the most widely used indicators for tracking inflation and assessing changes in the cost of living over time.
CPI is calculated by collecting price data for a representative sample of goods and services that are typically purchased by urban consumers. The prices of these items are then aggregated and weighted according to their relative importance in the average consumer's expenditure. The resulting index reflects the average price level experienced by consumers
CPI is used by governments, central banks, businesses, and households for various purposes:
- CPI is primarily used to measure inflation, which is the rate at which the general level of prices for goods and services is rising. By tracking changes in the CPI over time, policymakers can gauge the extent of inflationary pressures in the economy and adjust monetary and fiscal policies accordingly
- Many labour contracts, pension plans, and government benefits are indexed to CPI. This means that payments or wages are adjusted periodically based on changes in the CPI to maintain purchasing power and account for changes in the cost of living
- Central banks often use CPI as a key input in their monetary policy decisions. By targeting a specific inflation rate, central banks aim to achieve price stability and support sustainable economic growth. CPI data helps policymakers assess whether monetary policy actions are effectively controlling inflation
- Investors and financial analysts use CPI data to adjust their investment strategies and financial planning. Understanding inflation trends can help investors anticipate changes in interest rates, bond yields, and stock market performance, which in turn influence investment decisions
- CPI data provides insights into consumer behavior and spending patterns. Changes in the prices of specific goods and services reflected in the CPI can affect consumer preferences, purchasing decisions, and overall economic activity
| Subject | Wholesale Price Index (WPI) | Consumer Price Index (CPI) |
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| Scope of Goods and Services | Measures changes in prices of goods traded in bulk by wholesalers, including raw materials, intermediate goods, and finished goods. | Tracks changes in prices of goods and services purchased by households for consumption, including food, housing, transportation, etc. |
| Target Audience | Relevant to businesses, policymakers, and analysts involved in production, manufacturing, and trade. | Important for individuals, households, labor unions, and policymakers involved in setting wages, pensions, and social security benefits. |
| Weighting and Composition | Based on a fixed basket of goods and services weighted according to their relative importance in wholesale trade. | Based on a basket of goods and services representative of urban consumer spending patterns. |
| Policy Implications | Changes in WPI affect production costs, supply chain management, and business profitability. Used by policymakers to assess inflation trends and formulate industrial and trade policies. | Changes in CPI directly impact the cost of living for households and influence consumer behavior, purchasing power, and welfare. Used by policymakers to adjust wages, social benefits, and taxation policies. |
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For Prelims: Consumer Price Index, Wholesale Price Index, Inflation, retail inflation, Producer Pirce Index, National Statistical Office, OPEC+, Crude oil, Kharif season, Monsoon,
For Mains:
1. Analyse the factors contributing to high food inflation in India in recent months. Discuss the impact of high food inflation on the Indian economy and suggest measures to mitigate it. (250 words)
2. Explain the concept of sticky inflation. What are the various factors that contribute to sticky inflation? Discuss the implications of sticky inflation for the Indian economy. (250 words)
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Previous Year Questions
1. With reference to inflation in India, which of the following statements is correct? (UPSC 2015)
A. Controlling the inflation in India is the responsibility of the Government of India only
B. The Reserve Bank of India has no role in controlling the inflation
C. Decreased money circulation helps in controlling the inflation
D. Increased money circulation helps in controlling the inflation
Answer: C
2. With reference to India, consider the following statements: (UPSC 2010)
1. The Wholesale Price Index (WPI) in India is available on a monthly basis only.
2. As compared to Consumer Price Index for Industrial Workers (CPI(IW)), the WPI gives less weight to food articles.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: B
3. Consider the following statements: (UPSC 2020)
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 2 only C. 3 only D. 1, 2 and 3
4. India has experienced persistent and high food inflation in the recent past. What could be the reasons? (UPSC 2011)
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30.
2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
3. The food supply chain has structural constraints.
Which of the statements given above are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: B
5. The Public Distribution System, which evolved as a system of management of food and distribution of food grains, was relaunched as _______ Public Distribution System in 1997. (SSC JE EE 2021)
A. Evolved B. Transformed C. Tested D. Targeted
Answer: D
6. Under the Antyodaya Anna Yojana, up to what quantity of rice and wheat can be purchased at a subsidised cost? (FCI AG III 2023)
A. 35 kg B. 40 kg C. 30 kg D. 25 kg E. 50 kg
Answer: A
7. As per the the National Statistical Office (NSO) report released on 7 January 2022, India's Gross domestic product (GDP) is expected to grow at ___________ per cent (in first advance estimates) in the fiscal year 2021-22? (ESIC UDC 2022)
A. 17.6 per cent B. 9.5 per cent C. 11 per cent D. 9.2 per cent E. None of the above
Answer: D
8. The main emphasis of OPEC (Organisation of the Petroleum Exporting Countries) is on which of the following? (UKPSC 2016)
A. The production of petroleum
B. Control over prices of petroleum
C. Both (a) and (b)
D. None of the above
Answer: C
9. In the context of global oil prices, "Brent crude oil" is frequently referred to in the news. What does this term imply? (UPSC 2011)
1. It is a major classification of crude oil.
2. It is sourced from the North Sea.
3. It does not contain sulfur.
Which of the statements given above is/are correct?
A. 2 only B. 1 and 2 only C. 1 and 3 only D. 1, 2 and 3
Answer: B
10. The term 'West Texas Intermediate', sometimes found in news, refers to a grade of (UPSC 2020)
A. Crude oil B. Bullion C. Rare earth elements D. Uranium
Answer: C
11. With reference to the cultivation of Kharif crops in India in the last five years, consider the following statements: (UPSC 2019)
1. Area under rice cultivation is the highest.
2. Area under the cultivation of jowar is more than that of oilseeds.
3. Area of cotton cultivation is more than that of sugarcane.
4. Area under sugarcane cultivation has steadily decreased.
Which of the statements given above are correct?
A. 1 and 3 only B. 2, 3 and 4 only C. 2 and 4 only D. 1, 2, 3 and 4
Answer: A
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INDUS VALLEY CIVILISATION (IVC)
- Cities such as Harappa, Mohenjo-Daro, and Dholavira were meticulously planned, with advanced drainage systems, well-laid-out streets, and organized housing
- The civilization had extensive trade networks, evidenced by artifacts found in excavations, including seals, pottery, and ornaments. Trade routes extended to Mesopotamia, Afghanistan, and other regions
- The Indus script, found on seals and pottery, remains undeciphered, so our understanding of their language and writing system is limited
- Agriculture was the primary economic activity, with evidence of sophisticated irrigation systems and the cultivation of various crops like wheat, barley, and cotton.
- The civilization demonstrated remarkable craftsmanship in pottery, metallurgy, and city planning. They made significant advancements in bronze metallurgy, creating tools, weapons, and ornaments from copper and bronze
- Archaeological findings suggest a complex belief system with evidence of worship of various deities, including mother goddesses and male gods. The discovery of seals with animal motifs suggests a possible connection to ritual practices
- The reasons for the decline of the Indus Valley Civilization are not entirely clear, but theories include environmental changes, such as drought or flooding, invasion, or the breakdown of trade networks. The civilization gradually declined around 1900 BCE to 1300 BCE
The Indus Valley Civilization (IVC) is typically divided into three main phases: the Early Harappan Phase, the Mature Harappan Phase, and the Late Harappan Phase. These phases mark the developmental stages of the civilization from its inception to its eventual decline.
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Early Harappan Phase (3300 BCE - 2600 BCE):
- This phase represents the initial stages of urbanization and civilization in the Indus Valley region.
- Settlements during this phase were characterized by small villages with rudimentary forms of pottery and simple agricultural practices.
- Evidence of early forms of craft specialization and trade begins to emerge.
- Cities like Harappa and Mohenjo-Daro were not fully developed during this phase but show signs of early urban planning.
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Mature Harappan Phase (2600 BCE - 1900 BCE):
- This phase marks the peak of the civilization, characterized by fully developed urban centers with advanced infrastructure.
- Cities such as Harappa, Mohenjo-Daro, and Dholavira reached their zenith during this period, exhibiting sophisticated city planning, advanced drainage systems, and standardized brick sizes.
- Trade networks expanded, evidenced by the presence of Indus seals and artifacts found in Mesopotamia and other distant regions.
- The civilization reached its cultural and technological heights during this phase, with advancements in metallurgy, pottery, and arts.
- The Indus script was in use during this period, though it remains undeciphered.
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Late Harappan Phase (1900 BCE - 1300 BCE):
- This phase marks the decline and eventual collapse of the Indus Valley Civilization.
- Urban centers began to decline, and many sites were abandoned or experienced a significant decrease in population.
- There is evidence of environmental stress, such as changes in river courses, possibly leading to agricultural decline.
- Increased evidence of conflict and invasions is noted, with some scholars suggesting that external pressures may have contributed to the civilization's decline.
- The Indus script disappears, and many of the distinctive features of the Mature Harappan Phase, such as standardized weights and measures, also vanish
The origins of the Indus Valley Civilization (IVC) are still subject to debate among historians and archaeologists. However, it is generally believed that the civilization emerged in the northwestern region of the Indian subcontinent, particularly in present-day Pakistan and northwest India, around 3300 BCE. The civilization likely emerged from earlier Neolithic and Chalcolithic cultures in the region.
Town Planning:
- One of the most remarkable features of the Indus Valley Civilization was its advanced urban planning.
- Cities such as Harappa and Mohenjo-Daro were carefully laid out with grid-like street patterns, well-organized residential and industrial areas, and sophisticated drainage systems.
- Buildings were constructed using standardized bricks, indicating a high level of central authority and organization.
Crafts:
- The Indus Valley Civilization was known for its skilled craftsmanship in various fields.
- Artifacts found at excavation sites include pottery, seals, sculptures, jewelry, and tools, showcasing the civilization's mastery of materials such as pottery, metal, and stone.
- The civilization also had a sophisticated system of weights and measures, indicating a well-developed economy and trade network.
Economy:
- Agriculture was the backbone of the economy, with the cultivation of crops such as wheat, barley, rice, and cotton.
- The civilization had extensive trade networks, both within the subcontinent and with regions as far as Mesopotamia.
- Indus seals, with inscriptions yet to be deciphered, were used for trade and administrative purposes, indicating the existence of a complex economic system.
Religion:
- The religious beliefs of the Indus Valley Civilization are not fully understood due to the lack of deciphered texts or inscriptions.
- However, archaeological evidence suggests the presence of a pantheon of deities, including mother goddesses and male gods, as well as animals such as bulls and elephants.
- Ritualistic practices, possibly including animal sacrifice, are inferred from archaeological findings.
Decline of the Civilization:
- The decline of the Indus Valley Civilization remains a subject of speculation and ongoing research.
- Various factors have been proposed, including environmental changes such as climate shifts, floods, or droughts, which may have led to agricultural decline.
- Some scholars suggest internal factors such as social unrest, political instability, or the exhaustion of natural resources.
- External factors such as invasion or conquest by Indo-Aryan tribes have also been proposed as contributing to the decline of urban centers.
- The decline of the Indus Valley Civilization was a gradual process, with urban centers being gradually abandoned and the civilization eventually giving way to new cultural and political entities in the region
In addition to the well-known sites in Pakistan such as Mohenjo-Daro and Harappa, the Indus Valley Civilization also had significant sites in Gujarat and other parts of India. Some major sites in Gujarat and other regions of India associated with the Indus Valley Civilization include:
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Lothal (Gujarat):
- Lothal is one of the most prominent Indus Valley sites located in Gujarat, India.
- It was a major center for trade and commerce, known for its dockyard, which is considered one of the earliest known examples of maritime architecture.
- The site also exhibits evidence of craft production, including pottery, metalwork, and bead making.
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Dholavira (Gujarat):
- Dholavira is another significant Indus Valley site located in Gujarat.
- It is one of the largest and most well-preserved Harappan sites, known for its sophisticated urban planning and water management systems.
- The site features a fortified citadel, large reservoirs, and extensive city walls.
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Kalibangan (Rajasthan):
- Kalibangan is an Indus Valley site located in Rajasthan, India.
- It is known for its distinctive fire altars and evidence of early ploughing techniques.
- The site also features a fortified settlement with well-planned streets and houses.
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Rakhigarhi (Haryana):
- Rakhigarhi is one of the largest Indus Valley sites located in Haryana, India.
- It is believed to have been one of the largest settlements of the civilization, covering an area of over 350 hectares.
- Excavations at Rakhigarhi have revealed evidence of urban planning, including a well-structured drainage system and residential complexes.
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Surkotada (Gujarat):
- Surkotada is an Indus Valley site located in Gujarat, India.
- It is known for its fortified settlement and evidence of both urban and rural life.
- Excavations at the site have revealed evidence of craft production, including pottery and metalwork



