India imports much of its crude from the Middle East, and its markets are sensitive to swings in prices, which have dipped this week on fears of a disruption to oil supplies.
"For the time being, the biggest risk factor for the Indian economy is the possible closure of Strait of Hormuz - where almost half of the global oil supplies pass through," said Arnob Biswas, head of FX Research at SMC Global Securities in New Delhi.
"Higher oil prices may lead to headline CPI beyond 6.00 per cent in the coming months," he added in reference to the consumer price index.
Brent crude futures were up 95 cents at $69.22 a barrel, after earlier rising to $71.75, their highest since mid-September 2019.
In India, the NSE Nifty 50 index-tracking blue-chip equities were down 0.86 per cent at 11,948.85 by 0350 GMT, while the benchmark S&P BSE Sensex slid 0.75 per cent to 40,564.72. The two indexes plunged nearly 2% on Monday after a spike in crude prices, and the Nifty saw its worst one-day drop in some four months.
Growth in Asia's third-largest economy has already slowed to multi-year lows, and on Tuesday, India forecast 5 per cent growth for the current financial year, the slowest pace in 11 years.
The projections will likely prompt finance minister Nirmala Sitharaman to opt for extra fiscal stimulus when she presents the annual budget next month.