Crack spreads — energy industry measures of the gap between crude prices and refined products like diesel — have soared in recent days as the global fuel picture is increasingly determined by global politics and war.

Why it matters: Crack spreads are basically the profit margin that refiners add on top of the price of a barrel of crude in order to come up with the prices they charge for refined products like diesel.

• Because the crack spread for diesel fuel, charted above, is rising, diesel fuel will likely get more expensive.
• And because diesel is a key input for industries like trucking and agriculture, higher diesel prices will ultimately be passed along to consumers, at least in part.

How it works: In the parlance of markets, a "spread" is simply the difference between one price and another.

• In this case, it's the difference between the current market price for a barrel of oil and the current price of products that refineries produce from oil: gasoline, jet fuel and diesel.
• In other words, crack spreads measure the theoretical profit margins petroleum refineries can make based on market prices.
• The chart above shows the difference between the futures price for ultra-low sulfur diesel in New York and the price of Brent crude oil.

Fun fact: The "crack" is oil industry jargon for the process using heat, pressure and chemicals to break up — i.e., crack — the carbon bonds of larger petroleum molecules into smaller ones used for fuel.

By the numbers: One benchmark U.S. diesel crack spread tracked by the futures market soared by roughly $10 on Wednesday, the most on record. (Though admittedly the records go back only to 2023.)

The intrigue: Most of that jump wasn't about the global price of crude, which jumped 5.2%, as U.S. and Iranian military strikes brought ship traffic through the Strait of Hormuz to a near halt.

• More of it had to do with a surge in the U.S. price of diesel fuel, which jumped 10%.

State of play: The surge in U.S. diesel prices is part of a complicated global story that involves both the Iran and Ukraine wars.

• Russia, a major exporter of diesel fuel to world markets, has suspended exports in recent days, as weeks of Ukrainian drone attacks on Russian refineries have hobbled production, prompting domestic shortages.
• That's created surging demand for U.S. diesel, most of which flow out of the U.S. Gulf Coast.
• U.S. fuel exports hit a record in June, and domestic diesel supplies have tumbled, pushing U.S. prices higher.
• Renewed fighting between the U.S. and Iran has added to the pressure, as the tankers bringing Gulf crude to global refineries are again stuck, pushing further demand to U.S. refiners.

The latest: In a report Friday, the International Energy Agency warned of an ongoing supply crunch for diesel and other refined products.

• Interestingly, China — which cut refined product exports soon after the war disrupted its supply of Iranian oil — has in recent days moved to restart those exports, though it's unclear whether that will continue or not.

What we're watching: How costs of diesel register in the coming cavalcade of corporate earnings reports — which begin in earnest next week — given its importance in industries like trucking, mining, railroads and agriculture.

• It'll also be interesting to see how the White House reacts as U.S. oil majors and refiners announce a bumper crop of profits, as the Financial Times noted.

Editor's note: The timeline in the chart with this story has been corrected.

Yields on inflation-protected long-term Treasury bonds are a lot higher than they've typically been in decades.

Why it matters: This is one of those times when what happens in the bond market matters to the stock market.

How it works: Rising yields on inflation-protected Treasury securities, known as TIPS, mean the market is offering investors an increasingly attractive way to lock in stock market profits notched over the last two and a half years.

• In other words, when these yields go up, it shifts the balance of risk and reward that influences where investors put their money.

Fun fact: Financial folks often refer to TIPS yields as "real yields" because they show you what investors receive — their real return — after the impact of inflation.

Zoom in: As our colleagues over at Axios Macro mentioned a few days ago, the rise in real yields reflects a few things at once.

• On one hand, it is a side effect of declining worries about inflation over the last month as the U.S. and Iran seemed focused on ending hostilities and new Federal Reserve chairman Kevin Warsh appeared to strike an anti-inflationary tone in his early days at the Fed.
• On the other, it reflects the strength of the AI-driven U.S. economy, where demand for capital is so fierce that the U.S. government is required to offer higher yields to compete for investor dollars.
• And finally, it reflects the large and growing deficits that the U.S. government and other countries around the world are running amid an international rearmament scramble, which should also keep yields elevated.

The bottom line: This adds up to an advantage for investors, especially if they're getting tired of stomaching the stock market's inherent ups and downs.