Strait of Hormuz Tensions Weigh on Crude Prices as Rupee Gains Strength
Crude oil prices remain volatile as markets track developments surrounding the Strait of Hormuz, while the Indian rupee may strengthen against the US dollar if geopolitical risks remain contained.
The energy market witnessed sharp swings during the week as investors reacted to changing expectations over a possible agreement to reopen shipping through the strategic waterway. WTI crude fell sharply at the beginning of the week after US President Donald Trump paused a planned strike on Iran and opted to pursue a diplomatic agreement, but prices later recovered as markets assessed reports of progress towards a temporary arrangement for shipping through the Strait.
Commodity market experts believe that a confirmed agreement to reopen the Strait could put further downward pressure on crude prices, while a renewed escalation in tensions could quickly bring back a geopolitical risk premium. In the domestic market, MCX crude oil declined to around Rs 7,100 before recovering to close near Rs 7,400.
Analysts also noted that the Indian rupee strengthened during the week, with the USD/INR pair settling around Rs 95.2 after touching a low of nearly Rs 94.9. They said the rupee remains technically supported as USD/INR trades below its long-term ascending trendline.