Indian government bond yields moved higher this Friday, driven by a sharp escalation in geopolitical tensions between the U.S. and Iran. The threat of military conflict in the Middle East has pushed Brent crude prices toward a critical resistance level of **$70.30** per barrel, marking a significant shift in market risk appetite. Traders in the Indian debt market remain on edge as the government prepares for its weekly auction of **330 billion rupees** ($3.64 billion). This sale includes three-year, seven-year, and 30-year papers. The increased supply comes at a time when rising energy costs threaten to pressure domestic inflation, which the Reserve Bank of India (RBI) recently projected at **2.1%** for the current fiscal year. The benchmark **10-year bond yield** has edged up to approximately **6.70%**, reversing a recent cooling trend. Earlier this month, yields had softened after the RBI maintained the repo rate at **5.25%** and ensured a banking system liquidity surplus averaging **2.70 trillion rupees**. However, the current "risk-off" sentiment has stalled this rally. In the derivatives market, long-term Overnight Index Swap (OIS) rates have also climbed. The five-year OIS rate settled near **6.04%**, reflecting heightened concern over global supply chain disruptions. Geopolitical uncertainty is now the primary driver, outweighing recent positive news such as the government’s plan to reduce gross borrowing by **1 trillion rupees** through debt switch operations. Global energy markets are reacting to a "10-day ultimatum" issued by the U.S. administration to Iran. With one-third of waterborne crude passing through the Strait of Hormuz, any disruption could see oil prices test **$72.00** per barrel. For India, a major oil importer, these levels increase the fiscal burden and limit the scope for further monetary easing in the near term. Market participants are closely watching the cutoff prices at today's auction for signs of institutional demand. While domestic liquidity remains ample, the external environment is currently dictating the pace of yield movements, forcing a cautious stance across the fixed-income spectrum.