Indian government bonds have fallen as escalating tensions in the Middle East pushed crude oil prices closer to $100 a barrel, while rising US Treasury yields also weighed on investor sentiment, Reuters reports.

The benchmark 6.94pc 2036 bond yield was at 6.8180pc as of 10:05am IST, after closing at 6.8012pc yesterday.

“Indian bonds are starting to look vulnerable as higher oil prices threaten to revive inflation pressures and weaken the rupee. Unless crude cools meaningfully, yields may have more upside,” a trader with a state-run bank said.

India imports almost 90pc of its crude oil requirement and is vulnerable to any supply shock as higher crude prices can swell its import bill, push up inflation and pressure the rupee.