As crude oil prices surged to $123 per barrel in late March 2026 — nearly double the $69/barrel seen in February 2026 — and the Indian rupee hit an all-time low of ₹94.1 per US dollar, India began seriously exploring the use of local currencies (INR, dirhams, and other Gulf currencies) to pay for West Asian oil imports. This shift is aimed at reducing India's dual vulnerability: a depreciating rupee and soaring dollar-denominated oil prices. India imports roughly 85% of its crude oil, with West Asia (Saudi Arabia, UAE, Iraq) being the dominant source. Paying in local currencies would reduce demand for US dollars, ease pressure on India's foreign exchange reserves, and align with broader de-dollarisation goals that India has been pursuing since 2022. The move is also seen as a hedge against geopolitical risks, particularly Iran's partial blockade of the Strait of Hormuz, which has roiled global energy markets. The Reserve Bank of India (RBI) and the Ministry of Petroleum are reportedly coordinating with Gulf nations to build bilateral currency swap or settlement frameworks. Iran had earlier declared that five "friendly nations" including India could pass through the Hormuz corridor. India's experiment with local currency oil payments, if successful, could reduce its current account deficit, stabilise the rupee, and reduce dependence on SWIFT-based dollar payments — a strategic priority under India's energy security and economic sovereignty agenda.