Rupee Weakens As Oil Prices Rise After Iran Tanker Attack

The Indian rupee is expected to open weaker on March 13 after crude oil prices climbed sharply following reported attacks on fuel oil tankers linked to Iran, increasing concerns over supply disruptions and putting pressure on the currency.

The one-month non-deliverable forward market indicated the rupee could open in the range of 92.18–92.22 against the United States dollar. The rupee had settled at 92.04 in the previous session, according to data reported by Reuters.

The currency’s movement comes as rising crude oil prices affect India’s external trade balance, as the country imports a significant portion of its energy requirements.

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Oil Prices Jump After Tanker Attack

Global crude oil prices rose on March 13 after Iraqi security officials reported that Iranian explosive-laden boats struck two fuel oil tankers.

The incident raised concerns over supply disruptions linked to the ongoing conflict involving Iran, the United States, and Israel.

Brent crude oil prices increased 7.3% to about $98.60 per barrel during the session. The rise came despite earlier market relief after the International Energy Agency announced a coordinated release of 400 million barrels of oil from strategic reserves.

According to Reuters, the tanker incident renewed concerns that disruptions to energy supply routes could continue amid tensions in the Persian Gulf.

Strait Of Hormuz Concerns Add Market Volatility

Energy markets have been closely monitoring developments around the Strait of Hormuz, a key global shipping route that carries a large share of the world’s crude oil exports.

Analysts at ING Group said in a note that disruptions to oil flows through the Strait of Hormuz could persist if tensions in the region continue.

Oil prices have experienced significant volatility during the week. According to Reuters data, prices moved within a wide range between roughly $81 and $120 per barrel amid changing developments related to the conflict.

Earlier in the week, oil markets had eased after Donald Trump, President of the United States, suggested that the conflict could de-escalate and that strategic reserves might be used to stabilise prices.

RBI Intervention In Currency Market

The movement in crude oil prices has also affected currency markets in Asia, including India. According to Reuters, the Reserve Bank of India has been intervening in the foreign exchange market in recent sessions by selling dollars in an attempt to moderate volatility in the rupee.

Higher oil prices could lead to an increase in India’s import bill. This could have an impact on the demand for the U.S. dollar in the Indian currency market. 

Market participants said the central bank’s intervention is aimed at ensuring that any decline in the rupee remains orderly during periods of volatility in global commodity prices.

The rupee’s movement will continue to be influenced by crude oil prices and developments related to the conflict affecting energy supply routes.