Indian government bond yields opened marginally higher on June 3 as rising crude oil prices and uncertainty surrounding the Reserve Bank of India's upcoming monetary policy review weighed on sentiment. The benchmark 10-year government bond yield rose to 7.0282%, compared with its previous close, reflecting investor concerns over inflationary pressures from elevated energy prices.

Brent crude prices climbed close to $97 per barrel after renewed hostilities between the United States and Iran intensified concerns over global oil supply disruptions. The continued rise in oil prices is particularly significant for India, which imports a large portion of its crude oil requirements, making the economy vulnerable to imported inflation and a widening current account deficit.

Market participants are now focused on the RBI's monetary policy announcement on June 5. While a majority of economists expect the central bank to keep the repo rate unchanged at 5.25%, elevated crude prices, a weakening rupee, and rising inflation risks have prompted some analysts to call for a rate hike or a more hawkish policy stance.

Bond markets have remained sensitive to developments in global energy markets. Rising oil prices have increased expectations that inflation could accelerate in the coming months, potentially limiting the RBI's flexibility to support growth through accommodative monetary policy. Recent commentary from policymakers and economists suggests that the central bank may revise its inflation forecasts higher while maintaining a cautious outlook on economic growth.

Apart from the policy decision, investors are also tracking India's GDP data and broader macroeconomic indicators for clues on the direction of interest rates and bond yields. Market participants expect bond yields to remain volatile in the near term as geopolitical developments, crude oil prices, and RBI guidance continue to influence sentiment.