Jakarta. Rupiah weakened past the psychological Rp17,000 per dollar level at Monday’s opening as surging global oil prices fueled a broad risk-off mood, triggering pressure on emerging market currencies.

The rupiah briefly slid 76 points, or 0.45%, to Rp17,001 per US dollar in early trading in Jakarta, as investors reacted to escalating geopolitical tensions in the Middle East that pushed crude prices sharply higher.

Currency analyst Lukman Leong of Doo Financial Futures said the rupiah was likely to remain under pressure as markets grew increasingly concerned about the inflationary and economic fallout from the oil rally.

“The rupiah is expected to weaken against the US dollar amid worsening risk-off sentiment triggered by crude oil prices rising above $100 per barrel, which is feared to have a major impact on the global economy and inflation,” Lukman told Antara on Monday.

He projected the rupiah to trade within a range of Rp16,900 to Rp17,050 per dollar during the day.

Oil prices surged as geopolitical tensions intensified in the Middle East, with the conflict involving the United States and Israel against Iran reportedly spreading to multiple areas, raising fears of disruptions to global energy supplies.

Market uncertainty deepened after Mojtaba Khamenei was appointed Iran’s new supreme leader following reports that his father, Ayatollah Ali Khamenei, had died. The appointment of a figure widely viewed as aligned with hardline factions strengthened expectations that Iran may not ease tensions with the US and Israel anytime soon.

The escalating conflict has also raised concerns over shipping routes through the Strait of Hormuz, a key global energy chokepoint, further fueling the oil rally.

WTI crude oil futures jumped as much as 31% on Monday before trimming gains to trade about 12% higher above $100 per barrel, as production cuts by several major Middle Eastern producers compounded supply concerns following disruptions in the Strait of Hormuz. As of 3:21 p.m. Jakarta time, Brent crude price rose 15.43%  stood at $107/barrel.

The sharp increase in oil prices has intensified fears of global inflation pressures, weighing on emerging market currencies including the rupiah.

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