Dollar Rallies, Euro Slips as Iran Conflict Sparks Oil Surge

Global markets tilted toward safe-haven assets on Monday after US and Israeli attacks on Iran signalled a broader conflict in the Middle East. The escalation pushed oil prices sharply higher and dampened risk appetite. Traders responded to escalating tensions and potential oil supply disruptions by moving into the US dollar and the Swiss franc. Conversely, the euro and other risk-sensitive currencies were showing relative weakness.

The reported death of Iranian Supreme Leader Ayatollah Ali Khamenei and Iran’s response to Israeli airstrikes intensified market volatility.

Currency And Commodity Market Moves

The market reaction reflected typical patterns seen during geopolitical stress; investors shifted to perceived safe havens and reduced their exposure to currencies tied to trade and growth.

Major currency moves:

• Swiss franc: fell 0.43% to 0.7727 per dollar, though still trading near the decade-high of 0.7604 reached in late January.

• Franc vs euro: strengthened to 0.9028 per euro, its strongest level in 11 years (since 2015).

• Euro: dropped 0.80% to $1.1721, after touching $1.1698, its lowest since January 22.

• Yen: weakened 0.61% to 157.005 per dollar, hitting a low of 157.25, its weakest since February 9.

• Australian dollar: tumbled as much as 1.2% earlier, before trimming losses to trade down 0.60% at $0.7025.

• Offshore Chinese yuan: fell 0.25% to 6.8819 per dollar.

• US dollar index (DXY): rose 0.74% to 98.37 after touching 98.566, its highest level since January 23.

Oil prices were a central market focus after early Monday trades showed prices leaping roughly 9%, driven by supply-risk perceptions linked to the Strait of Hormuz. Shipping data indicated that at least 150 tankers, including crude and LNG vessels, dropped anchor in open Gulf waters beyond the chokepoint, with dozens more stationary on its opposite side, a sign of operational caution in global seaborne trade.

Israeli military officials said many targets remained, though they indicated ground forces were not being considered, while US President Donald Trump suggested the campaign could run for about four weeks.

What It Means For India

India’s markets and economy are particularly sensitive to issues related to global energy supplies.

India’s energy exposure and risk profile:

• India gets more than 85% of the crude oil it needs from abroad. This shows limited domestic oil production, hence the need for imported crude.

• In early 2026, nearly 2.6 million barrels of India's crude oil passed through the Strait of Hormuz per day, which shows the surge in recent months.

If crude prices stay high for a long time, India's import bills may get affected. Economists estimate that if crude oil prices go up by $10 per barrel, India's annual oil import cost might go up by about ₹10,000–₹15,000 crore.

The Strait of Hormuz is still one of the key points for global energy transit. It handles around 20% of all oil and LNG exports by sea. Long-term problems or higher war-risk insurance premiums for tankers might make oil even more expensive for India and other big importers.

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Investors’ Takeaway

The ongoing conflict in the Middle East has shifted market dynamics toward safe-haven currencies and exposed vulnerabilities in global energy supply chains. For India, too much dependence on foreign crude oil, particularly through the Strait of Hormuz, increases the vulnerability of the rupee, trade balance and inflation if oil prices don’t get reduced. Investors would want to monitor the turn of events involving energy supply routes and oil price trends, as these will continue to define currency trends, commodity prices, and broader market sentiment in the near term.

Sources:

US News

CNBC

The Print

Live Mint

The Guardian