Markets can't ignore the war anymore
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Newsletters Axios Local Show Axios Pro Axios Live The Axios Show Login Axios All topics Axios Search Sep 3, 2026 - Business Markets can't ignore the war anymore Emily Peck email (opens in new window) sms (opens in new window) facebook (opens in new window) twitter (opens in new window) linkedin (opens in new window) bluesky (opens in new window) Add Axios on Google Add Axios as your preferred source to
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Oil prices are heading back toward $100 a barrel, and, perhaps more crucially, the price of diesel fuel futures is now sitting at an all-time high.
Why it matters: Investors are starting to recognize that higher oil prices from the Iran war aren't something they can continue to ignore.
The big picture: Higher energy prices are showing up across the economy, driving up costs for companies, regular people and even governments around the world that are now facing higher borrowing rates.
Catch up quick: After falling off initial early war highs, oil prices started rising in July. At the time, attacks on commercial vessels in the Strait of Hormuz reignited fighting, and President Trump said the "memorandum of understanding" the two countries had signed weeks before was "over."
State of play: Over the past few days, tensions have intensified .
By the numbers: The yield on the 10-year Treasury — a benchmark for mortgages and other loans — was hovering at around 4.8% Wednesday, after touching its highest level in nearly three years.
Follow the money: Government bond yields around the world are also at multiyear highs.
How it works: The rise in oil prices is driving up inflation expectations, as people expect higher energy costs to drive up both the cost of making things and the cost of moving those things from place to place.
Zoom out: The correlation between the price of oil and the 10-year Treasury yield is close to its strongest in five years, per an analysis from Morgan Stanley. (That means they're moving up together.)
Yes, but: Government bond yields are moving up for other reasons as well — including unsustainable deficits, geopolitical uncertainty and even the AI boom, as we've written about before .
Catch up quick: The initial shock of the U.S.-Iran war clobbered stocks back in early March, but they bounced back — partly after the two sides reached a ceasefire agreement in June.
The bottom line: Those days may now be behind us. "For global markets the oil pain has become too great to ignore," investor Bob Elliott wrote in a note Wednesday morning.
The market for diesel fuel is feeling the energy squeeze most acutely. Diesel is a key input for just about anything grown or transported through the U.S.
And the price of benchmark diesel futures is sitting at an all-time high of $4.73 per gallon.
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