Brent crude rose for a fourth consecutive session on Wednesday, climbing 1.6 percent to $99.49 a barrel in early Asian trading, as Iran launched fresh attacks on US military assets in the Gulf and shipping through the Strait of Hormuz stayed constrained. US WTI gained 1.7 percent to $94.63. The move puts Brent within a dollar of $100 for the first time since late July.
The supply picture
The disruption has run for more than six months, but the last two weeks brought a clear escalation. Iran struck US military assets in the Gulf and warned of retaliation against any further American attacks, while traffic through the Strait of Hormuz, the chokepoint for roughly a fifth of the world’s oil, remained limited. A US drone incident near the waterway and Iran’s claim to have captured a vessel added to the risk premium.
Refined products are pricing the shortage harder than crude itself, with diesel and gasoline gains running ahead of the headline benchmarks. Goldman Sachs raised its December 2026 Brent forecast to $85 in its baseline scenario, which assumes some normalization later in the year, but outlined a severe escalation case near $120 if attacks on commercial shipping intensify and regional exports are hit. Morgan Stanley has also lifted its forecasts as the physical market tightens.
India counts the cost
For importers, the oil shock is a currency story. India’s rupee opened at 94.87 per dollar on Wednesday, down 5 paise from Tuesday’s close, after falling 18 paise the previous day, its sharpest single-day decline in nearly a month. Brent near $99 means a fatter import bill for a country that relies on imports for the bulk of its crude.
The Reserve Bank of India has been selling dollars to cushion the currency, unloading an estimated $8 billion last week, with some trader estimates as high as $15 billion. State-run banks offered dollars around 94.70 on Tuesday. The intervention had pushed the rupee to a two-month high late last week, but Tuesday’s pressure proved too much even with the RBI active. Traders see 95 per dollar as the next level to watch if crude and geopolitical risks persist.
India’s foreign exchange reserves recently hit a record $740.8 billion, which gives the central bank room to keep smoothing the path. Importer hedging demand is rising as companies lock in dollar purchases, and exporters are holding back dollar sales, tilting flows against the currency.
| Benchmark / pair | Latest | Move |
|---|---|---|
| Brent crude | $99.49 | +1.6% |
| WTI crude | $94.63 | +1.7% |
| USD/INR | 94.87 | rupee -0.1% |
Central banks in the crosshairs
The inflation mechanics matter beyond currencies. Sustained oil near $100 feeds into transport and production costs across every import-dependent economy, and markets have already repriced monetary policy. Futures put the odds of a Federal Reserve hike at its September 16 meeting near 56 percent, and the European Central Bank is widely expected to raise rates 25 basis points this week. The Bank of Japan is also increasingly expected to hike next week, a call that pushed the yen to its strongest level since mid-February.
Simultaneous tightening in the US, Europe and Japan raises the risk that bond yields stay elevated even as growth slows, an uncomfortable mix for equities. The Bank for International Settlements has urged central banks to look through a supply-driven spike if it proves temporary, the textbook case for holding fire, but the memory of 2022 makes policymakers cautious about repeating a slow response.
The near-term test is Friday’s US CPI report. A hot print would push the September hike probability higher, support the dollar and add pressure to currencies like the rupee. A soft one would give markets room to argue the oil shock has not yet seeped into broader consumer prices.
For oil consumers in Asia, the calculation is blunter. Every dollar Brent holds above $90 widens current account pressure for India, Pakistan and other net importers, and currency defense is expensive. The RBI has the reserves to manage weeks of this, not necessarily months. Whether Hormuz traffic normalizes, or the escalation continues, will decide which problem these central banks end up owning: an oil bill or a recession risk.
discussion