Rupee Slides to 86.35 vs Dollar as Soaring Oil Prices Stir Market Jitters Over Middle East Turmoil

June 18, 2025: The Indian rupee began Tuesday’s trading session on a weaker note, slipping 11 paise to open at 86.35 per US dollar, as investors reacted to a steep rise in global crude oil prices and rising instability in the Middle East.

In the previous session, the domestic currency had settled at 86.24. The latest slide reflects mounting concerns of capital flight, spurred by a surge of over 4% in global oil prices, triggered by the escalating Israel-Iran military standoff, now entering its sixth day.

Oil Prices Surge Over $3 as Conflict Intensifies

International oil prices climbed sharply, adding fresh pressure to global markets. Brent crude jumped by $3.22, closing at $76.45 per barrel, while US West Texas Intermediate (WTI) rose $3.07 to settle at $74.84 per barrel.

Although no direct disruption to oil infrastructure has been reported so far, the fear of broader regional conflict continues to unnerve investors and drive up prices.

Dollar Index Dips Marginally

The US dollar index, which measures the dollar’s performance against six key global currencies, eased slightly to 98.692, compared to the previous closing figure of 98.820. The minor pullback offered limited relief for the rupee amid broader risk aversion.

India’s Economic Fragility Exposed to Oil Price Volatility

With India importing more than 80% of its crude oil requirements, the economy remains highly exposed to global price shocks. Analysts estimate that a $10-per-barrel increase in crude prices could expand the current account deficit by 0.4% of GDP and elevate retail inflation by up to 35 basis points.

This vulnerability is now in focus, as markets weigh the economic repercussions of sustained geopolitical tensions.

Cautious Outlook Amid Ongoing Uncertainty

Investor sentiment remains cautious as the Middle East situation unfolds. While the rupee continues to feel the heat from rising oil costs and geopolitical unease, a de-escalation in the Israel-Iran standoff could help the currency bounce back toward the 85.50 level in the near term.

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