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Rupee weakens as oil prices jump on Middle East supply fears
USD/INR rises to near 96.45, after Reuters said closures of the Bab el-Mandeb Strait could cut global oil supply by 7%.
The Indian rupee opened lower against the US dollar, with USD/INR rising to around 96.45 after a fresh rally in oil prices, FXStreet said. The move reflects renewed concern about further global energy supply disruptions, which typically weigh on oil-importing economies like India. FXStreet pointed to the Bab el-Mandeb Strait, the Red Sea passage used for oil shipments to Asia, being closed after Yemen’s Iran-aligned Houthis halted exports from Saudi Arabia as retaliation for US actions. The outlet cited a Reuters report that the strait closure could reduce global oil supply by 7%. The situation follows other supply constraints, including the closure of the Strait of Hormuz, a chokepoint that supplies nearly 20% of global energy, according to FXStreet. The Saudi-led coalition criticized the move, calling it a violation of international law, and US Secretary of State Marco Rubio warned that Iranian control of Hormuz would have repercussions beyond the Middle East. FXStreet also noted foreign portfolio flows, saying Foreign Institutional Investors were net buyers on Tuesday after six straight sessions of net selling. At the same time, the outlook for Indian equities was described as likely remaining subdued as higher oil prices would raise the country’s import bill, limiting room for government spending on infrastructure and development.