Daily Brief – May 29, 2026

India hosts the 11th Quad Foreign Ministers’ meeting, with the joint statement naming the Strait of Hormuz and establishing a Quad Fuel Security Forum. The rupee falls to 96.96 against the dollar, with RBI having spent $38 billion defending it. Brent crude drops to $93 following a ceasefire extension announcement. Iran and the US reach an MOU framework that decouples Hormuz from nuclear resolution. Pakistan Army Chief Munir makes a second trip to Tehran in a month.

May 29, 2026

Iran
West Asia

Authors

Impact on India

Foreign Policy & Neighbourhood

  • India hosted the 11th Quad Foreign Ministers’ meeting in New Delhi this week. The joint statement discussed the stability of vital sea lanes, specifically naming the Strait of Hormuz and the Red Sea, and demanded strict adherence to UNCLOS with respect to navigational freedoms.
  • In response to the energy crisis, the ministers signed a standalone statement on Indo-Pacific Energy Security, establishing a Quad Fuel Security Forum to strengthen their respective strategic petroleum systems and maximise mutual assistance during periods of restricted global energy supply.

Economy

  • The Indian rupee fell to 96.96 against the dollar, dangerously close to the 97-level. The rupee has weakened by over 6% since the West Asia war began in February. The RBI has sold over $38 billion from forex reserves to defend the currency, with reserves now standing at approximately $688 billion.
  • A weakening rupee risks widening India’s Balance of Payments deficit due to higher import costs. While India is not at immediate risk of a BoP crisis, prolonged higher crude oil prices remain a significant challenge.

Key Actors

Pakistan

  • Pakistan Army Chief Field Marshal Asim Munir travelled to Tehran for the second time in over a month on May 22, holding late-night talks with Iranian FM Abbas Araghchi to advance US-Iran ceasefire negotiations. Pakistan’s credibility as a mediator largely hinges on both sides’ responses, with Islamabad under mounting pressure to deliver progress amid the conflict’s global economic disruption and its domestic impact on Pakistan. The military’s centrality to these negotiations and broader foreign policy decision-making is expected to remain overt going forward.

China

  • China responded relatively mildly to the recent US bombing in southern Iran and its characterisation of the attack as a “self-defence manoeuvre.” Defence spokesperson Jiang Bin reiterated Beijing’s consistent line that the only way forward is negotiation and diplomacy between Washington and Tehran, while emphasising that the “legitimate concerns” of all parties — for Beijing, meaning openness in Hormuz and energy security — should be taken into account.

The United States

  • US President Donald Trump has again claimed that a deal is about to be reached, though the details of ongoing negotiations remain uncertain. Reports suggesting the withdrawal of US troops from West Asia, alongside the willingness of several US allies to enter into agreements with Israel, further indicate an intent to reduce tensions.

Global Systems

Energy & Supply Chains

  • Brent crude fell to $93 on May 29 following the announcement of a ceasefire extension. The ongoing surge in fertiliser costs prompted a meeting of EU agriculture ministers in Brussels; nitrogen fertiliser prices in Europe are now approximately 70% above their 2024 average.
  • For India, 17 ships carrying fertilisers have been stranded in the Persian Gulf since the war began. India’s fertiliser subsidies are projected to surpass Rs 3 lakh crore due to rising prices — a nearly 75% increase over this year’s budgetary allocation. These fiscal pressures are expected to intensify as the war continues to affect global prices across multiple sectors.

Strait of Hormuz

  • Iran this week separated the waterway from the weapon. The MOU framework decouples Hormuz from nuclear resolution — Iran preserves its sovereignty architecture while the US gets commercial traffic restored. Hochstein’s assessment confirms what satellite and AIS data had already shown: the deal papers over the language, but the IRGC controls the corridor. The chokepoint changed ownership. The ink is still wet.

Diaspora

  • Data from the Reserve Bank of India shows the Indian diaspora withdrew nearly $2 billion in deposits from local banks during March 2026, at the onset of the conflict. While this underscores the vulnerability of capital to geopolitical disruptions, the withdrawal is likely to represent an immediate reaction rather than a prolonged structural shift.

This bulletin is prepared by the Takshashila West Asia Desk. For queries, contact research@takshashila.org.in.