Indian rupee under pressure after oil resumes rally on Iran tanker attack

MUMBAI: The Indian rupee is set to open weaker on Thursday with crude oil prices resuming their climb, keeping up the ​pressure on the Asian nation’s terms of trade and currency.

The ‌1-month non-deliverable forward indicated the rupee is likely to open in the 92.18-92.22 range versus the US dollar, having settled at 92.04 on Wednesday.

Oil prices climbed on Thursday ​after Iraqi security officials said Iranian explosive-laden boats had hit two ​fuel oil tankers, adding to supply disruption fears stemming from ⁠the US-Israeli war with Iran.

Brent crude jumped 7.3% to $98.60 a barrel, ​with the tanker attack overshadowing relief after the International Energy Agency agreed ​to release a record 400 million barrels of oil to help rein in prices.

With no signs of de-escalation in the Persian Gulf, disruptions to oil flows through the ​Strait of Hormuz are likely to persist, ING Bank said in ​a note.

Oil prices have swung wildly this week, moving between roughly $81 and $120 a barrel ‌amid ⁠rapidly shifting headlines on the war.

There was relief after U.S. President Donald Trump indicated a de-escalation in the Iran war and markets began pricing in the possibility of strategic reserve releases to cap the rally. ​

The attack on ​fuel oil ⁠tankers has revived fears of supply disruptions, underscoring the fragility of that relief.

“With oil swinging like this, the ​rupee will remain vulnerable,” a currency trader at a ​private bank ⁠said.

“Expectations are that the RBI will step in to keep the pace of the rupee’s decline orderly, not necessarily to stop the move altogether.”

The ⁠Reserve ​Bank of India has been actively intervening ​in the foreign exchange market in recent sessions, traders said, selling dollars to curb pressure ​from the choppy oil prices.