Brent crude nears $100 as US-Iran tensions spike supply fears
Oil prices climbed to multi-week highs following threats of economic warfare and new missile launches. The Indian rupee fell significantly due to the rising cost of imported energy.
Brent crude futures approached $98.25 per barrel on Tuesday, trading near $100 as geopolitical risks mounted. International benchmarks rose amid fears that conflict between the United States and Iran could persist indefinitely. The price increase followed reports that Tehran warned Washington of 'economic warfare' and claimed to have fired an advanced missile at US warships. Iranian-backed Houthis forces also attacked energy facilities in Saudi Arabia, wounding 73 people and halting operations at multiple sites. A separate strike by US forces hit three Iranian oil tankers near Kharg Island earlier this week.
Suvro Sarkar, head of energy research at DBS Bank, noted that the escalation could materially change market risk assessments through 2027. The surge in commodity prices threatened to limit central banks' ability to cut interest rates, particularly as traders priced a 60% chance of a 0.25 percentage point rate hike by the US Federal Reserve.
Emerging markets faced significant pressure from the oil rally. The Indian rupee logged its sharpest decline since late July, settling at 94.8175 per dollar after trading near a two-month high earlier in the month. Traders attributed the currency's fall to sustained hedging demand and rising import costs. Other emerging currencies, including the Thai baht and South African Rand, also slipped roughly 0.4% against the US dollar. Meanwhile, Asian equities retreated, with Mumbai stocks slipping 0.6% as inflation concerns loomed over global financial stability.
