Hormuz Uncertainty Drives Oil Prices to Near $90

Oil prices continue to rise, driven primarily by uncertainty surrounding the Strait of Hormuz. Despite a significant build in US crude stocks, Brent crude is trading around $89.67 per barrel, up 0.9%, while WTI crude is at $83.98 per barrel, also up 0.9%. The increase in oil prices has put additional pressure on the Indian rupee, which was trading at around Rs. 95.43 per US dollar.

The uncertainty surrounding the Strait of Hormuz remains a major concern for oil markets. Iran has stated that it will not reopen the waterway until its 'demands' are met, while US President Donald Trump has claimed that the US has 'total control' of the Strait. Diplomatic talks between Washington and Tehran have made progress, but the timing of a reopening remains uncertain.

For India, the impact of higher oil prices is twofold - it increases the country's import bill and puts additional pressure on the rupee. Every $1 increase in crude price can add up to around $2 billion to the annual import bill, while a sustained $10/bbl increase in oil prices can widen India's current-account deficit by around 0.4% of GDP.