The rupee avoided a record low on Friday as the Reserve Bank of India likely intervened to ease pressure from high oil prices, weak domestic equities and renewed corporate hedging, traders said.

State-run banks were seen selling dollars shortly before the market opened at 9 a.m. IST, likely on behalf of the Reserve Bank of India, five traders told Reuters on Friday.

The selling continued through most of the session, pulling the rupee higher before it ended at 96.5625 per U.S. dollar, little changed on the day.

Brent crude topped $100 a barrel for the first time in two months before retreating about 4%. Developments in the Middle East pointed to worsening supply disruptions.

U.S. President Donald Trump has promised "major military punishment" for Iran and its Houthi allies after the Yemeni fighters struck two Saudi oil tankers in the Red Sea.

India, which imports nearly 90% of its crude needs, is particularly vulnerable to oil price shocks as they can fan inflation, strain external balances and weigh on the rupee by boosting demand for dollars.

Those concerns have pushed the rupee back near its record low of 96.96 hit in May, prompting intervention by the Reserve Bank of India that likely extended across multiple market segments on Friday.

Alongside spot dollar sales and intervention in the non-deliverable forwards market to steady the currency, the central bank likely conducted far tenor dollar-rupee buy/sell swaps to offset the liquidity impact of its spot interventions, traders said. The 15-month dollar-rupee forward premium declined 7 paisa to INR 3.47.

Elevated hedging against rupee weakness has also dragged on the currency. Clearing house data shows that net weekly forward dollar buying by merchants fell to roughly $2.9-$5.1 billion in early July before rebounding to about $7.1 billion in the week ending July 17.

The rupee's recent fall and rise in oil prices "has likely surprised markets and, in turn, spawned another wave of hedging," analysts at J.P. Morgan said in a note.

(Reporting by Jaspreet Kalra, Editing by Mrigank Dhaniwala and Nivedita Bhattacharjee)