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The Indian rupee is expected to remain under pressure through Thursday's session as the worsening U.S.-Iran dispute fuels a further rally in oil prices.

The rupee is expected to trade in a 96.50-96.70 range, with risks tilted to the downside, although support from the Reserve Bank of India is likely to limit losses, a currency trader at a private sector bank said.

The currency settled at 96.5650 on Wednesday, hovering near its weakest level in more than two months.

The rupee has been under sustained pressure since tensions between the U.S. and Iran flared up again, triggering a fresh rally in oil prices.

The currency had found slight respite from robust foreign inflows linked to the Reserve Bank of India's recent measures, which traders said helped reduce the risk of a bigger depreciation.

However, with oil prices continuing to climb, the currency of the world's third-largest oil importer is unlikely to find much relief.

"It is difficult to see any meaningful relief for the rupee if oil prices keep moving higher like this," the currency trader said.

"In fact, considering the current news flow, the risk of Brent crossing the $100 mark and moving higher is increasing."

RISKS BUILDING

Oil prices climbed to their highest level in six weeks, with Brent crude rising above $96 a barrel on mounting Middle East tensions.

The U.S. launched a fresh round of strikes on Iran-linked assets and Yemen's Houthis, including attacks near key shipping routes in the Red Sea. The Iran-aligned Houthis have threatened to target vessels carrying Saudi crude, raising concerns about disruptions to oil supplies.

Factoring in the renewed risks to shipments through the Persian Gulf and the threat to Saudi crude exports via the Red Sea, Brent at current levels may still be undervalued, ING said in a note.