Indian government bonds remained stable on Friday but recorded their first weekly decline since April 3, with the benchmark 6.48% 2035 bond yield rising to 6.9365% from 6.9498% the previous day. This week, yields increased by 4 basis points after a 23 basis points decline over the last two weeks. The negative market sentiment is largely attributed to ongoing tensions in the West Asia region, particularly the U.S.-Iran conflict, which has led to a significant rise in oil prices. Brent crude oil prices reached approximately $107 per barrel, marking a nearly 50% increase since the conflict escalated on February 28. This surge in oil prices is concerning for India, which imports nearly 90% of its crude oil, as it could exacerbate inflation and increase the fiscal deficit. The Reserve Bank of India (RBI) has indicated that prolonged conflict could lead to second-round effects on inflation, as noted by Deputy Governor Poonam Gupta. Additionally, India's overnight index swap (OIS) rates have been rising, with the one-year OIS rate closing at 5.88% and the two-year rate at 6.10%, reflecting the market's response to rising bond yields and oil prices.