Demand for Indian government bonds faltered on Thursday ​as renewed US-Iran strikes drove oil prices higher and raised ‌concerns about the economic fallout for the world’s ​third-largest oil importer.The US launched ⁠new strikes on multiple targets overnight in Iran, with US President Donald Trump threatening even more attacks if no peace deal ‌is secured.Brent crude futures surged 1.6 per cent to $94.55 in Asian trade. It has risen 30 per cent ‌since the war began on February 28.The ‌yield ⁠on the benchmark 6.94 per cent 2036 bond steadied at ⁠6.9430 per cent by 10:15 a.m. IST after rising to 6.9551 per cent earlier in the session. Yields move inversely to prices.Foreign banks sold ₹4,376 crore of ‌Indian bonds on Thursday, their biggest one-day outflow since April 2.India is increasingly counting the cost of the Iran war, which economists say will keep ‌mounting if the deadlock between the US and ​Iran remains unresolved and the blockage of oil supplies continues.Consequently, the central bank sees ⁠inflation averaging 5.1 per cent in the financial year and growth slipping to 6.6 per cent from 7.7 per cent in the previous year.The Indian ‌rupee slipped 0.43% to 95.6725 per dollar on Thursday. It has depreciated over 5 per cent since February-end.The government and the Reserve Bank of India have announced a slate of measures to boost foreign inflows to defend the rupee and strengthen India’s external ‌balances.“Any long-term bets on Indian debt after the measures will depend ​on the actual flow of foreign funds... till then focus is on Brent,” a ⁠private-bank trader said.RatesIndia’s overnight index swap rates eased as ⁠traders received betting yields would soften over the medium term on foreign inflows.The one-year swap fell ‌2.5 bps to 6.03%, while the two-year rate and the five-year rate eased 1.25 bps each to ​6.21% and 6.4550% respectively.Published on June 11, 2026