Explained: How Iran War Drove Up Costs And Shook Indian Markets
GS2Polity · Governance · IR· India's bilateral relations· Prelims + Mains·
Why in news
The Iran war in 2026 triggered a sharp depreciation of the Indian Rupee and a spike in crude oil prices, leading to massive Foreign Portfolio Investment (FPI) outflows.
Background
The Indian Rupee fell from 90.12 to 94.60 against the USD between January 2 and June 30, 2026. Crude oil prices jumped from $67.72 per barrel in April 2025 to $114.48 per barrel in April 2026 according to the Petroleum Planning & Analysis Cell.
Facts for Prelims
- FactIndian Rupee value: Fell from 90.12 to 94.60 against the USD between January 2 and June 30, 2026.
- FactCrude oil price jump: Rose from $67.72/barrel in April 2025 to $114.48/barrel in April 2026.
- FactFPI Outflow: Foreign Portfolio Investors withdrew Rs 2,12,872 crore during January-June 2026.
- FactNifty 50 Performance: Fell from 25,517.05 on June 30, 2025, to 23,865.75 on June 30, 2026.
- BodyPetroleum Planning & Analysis Cell (PPAC) provides data on India's oil basket prices.
For Mains
Q. Analyze how geopolitical conflicts in the Middle East impact India's external sector and the stability of its domestic capital markets.
Dimensions to cover in your answer
- Currency vulnerability: High sensitivity of the Rupee to global oil price shocks and USD appreciation.
- Capital flight risk: Correlation between geopolitical uncertainty and rapid Foreign Portfolio Investment (FPI) withdrawals.
- Trade deficit pressure: Escalating import costs for energy inputs impacting the current account balance.
Keywords: Geopolitical Risk · Capital Flight · Current Account Deficit · Currency Depreciation · Energy Security · Market Volatility
More International Relations notes
- Modi, Prabowo Chart Deepening Ties Amid Indo-Pacific Uncertainty · 8 July 2026
- Shah Ends 50-Year Narmada Payment Dispute, ₹2 Lakh Dues Cleared · 8 July 2026
- Bangladesh Adviser Says No Country Should Be Anxious About Teesta Project · 7 July 2026
- Millions mourn Ayatollah Ali Khamenei in Qom funeral · 7 July 2026
- Indonesia to Buy India's Astra Missiles After Successful Tests · 7 July 2026
- Hamas Dismantles Gaza Government, Hands Control to UN Committee · 7 July 2026
Something wrong, or something missing?
Spotted a mistake in a note, or want a topic, format or PDF that would help your preparation? Write to us. We read every mail and fix errors fast.
This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.