Demand for Indian government bonds faltered on Thursday as renewed U.S.-Iran strikes drove oil prices higher and raised concerns about the economic fallout for the world's third-largest oil importer. The United States launched new strikes on multiple targets overnight in Iran, with President Donald Trump threatening ‌even more attacks ⁠if ⁠no peace deal is secured. Brent crude futures surged 1.6% to $94.55 in Asian trade. It has risen 30% since the war began on February 28.India bond demand wanes as US-Iran tensions lift oilIndian government bonds saw reduced demand on Thursday. Renewed U.S.-Iran strikes pushed oil prices higher. This development raises concerns about India's economy, the world's third-largest oil importer. Foreign banks sold Indian bonds, marking a significant outflow. Economists predict mounting costs if the conflict persists. Inflation is expected to average 5.1% with growth slipping to 6.6%. The yield on the benchmark 6.94% 2036 bond steadied at 6.9430% by 10:15 a.m. IST after rising to 6.9551% earlier in the session. Yields move inversely to prices. Foreign banks sold 43.76 billion rupees ⁠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 U.S. and Iran remains unresolved and the blockage of oil supplies continues. Consequently, the central bank sees inflation averaging 5.1% in the financial year and growth slipping to 6.6% from 7.7% in the previous year. The Indian rupee slipped 0.43% to 95.6725 per dollar on Thursday. It has depreciated over 5% 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.