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. The rising price of energy is a big factor pushing bond yields higher and worrying policymakers in the U.S. and the rest of the developed world. 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. The price of a barrel of Brent crude oil, the global benchmark, was trading at $95 on Wednesday afternoon, up from the low $80s a month ago. 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. The U.K.'s 10-year gilt hit its highest level since 2008; Germany's long bond rose to its highest since 2011. And the government bonds of Japan, an importer of oil vulnerable to energy price shocks, touched their highest level since 1996. Stocks have moved basically sideways over the past week. 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. That's impacting government bond yields, as investors demand more interest to compensate for inflation eating away at the value of their money. Those inflation expectations are also affecting stock valuations, some analysts believe — expectations for future earnings don't look as high once you take higher inflation into account. 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.) The stock/oil correlation is nearly its most negative. (Stocks move down, while oil moves up.) 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. The relationship between stocks and oil can be murky. Certainly the war is driving up share prices in sectors like energy. 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. Energy prices also retreated as it became clear that other forces — especially China importing less oil — were keeping them in check. 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. Bonus Chart: 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. Data: FactSet; Note: NY Harbor ultra-low sulfur; Chart: Emily Peck/Axios