Indian government bonds fell in early trade on Wednesday, as oil prices continued to rise amid concerns over energy supplies from the Middle East, but buying at lower levels limited the losses.

Brent crude rose 1.3 percent to a six-week high of $92.2 per barrel in Asian trade, as fears of additional supply disruptions escalated after US forces launched raids on Iranian military targets for the eleventh consecutive night, according to Reuters.

US Secretary of State Marco Rubio said on Wednesday that the United States remains ready to negotiate to end the crisis with Iran, but Tehran shows no seriousness in engaging in talks.

The continued rise in crude oil prices is likely to widen India's trade deficit and increase inflationary pressures.

The yield on the benchmark 2036 Indian government bond, which has a coupon of 6.94 percent, rose 1.5 basis points to 6.8078 percent by 11:50 a.m. India time, compared with 6.7938 percent at Tuesday's close.

The rise in oil prices also pushed up US Treasury yields, which could reduce the appeal of higher-risk emerging market debt.

The yield on the 10-year US Treasury note rose to 4.63 percent overnight, its highest level in two months.

Nevertheless, price-driven buying helped limit losses in the local bond market.

One trader at a private bank said, 'State bank purchases seem to have eased the decline, as the benchmark 10-year yield failed to breach the 6.83 percent level at the open.'

Traders noted that hopes for a possible peace agreement between the US and Iran in the near future, along with strong cash flows from the Reserve Bank of India's foreign exchange market operations, helped improve investor sentiment.

In the first update since the program was launched in early June, the Reserve Bank of India said its operations raised $20.72 billion from June 8 to July 17.

Investors are also awaiting updates on the inclusion of Indian bonds in the Bloomberg Global Aggregate Index, after the index provider indicated that inclusion could occur by mid-2026.

In contrast, overnight interest rate swaps rose, as rising oil prices cast a shadow over India's economic outlook. The one-year swap rate rose 4 basis points to 6.01 percent, the two-year swap rate rose 5 basis points to 6.1850 percent, and the five-year swap rate rose 4.25 basis points to 6.48 percent.