Oil Rises 2% To Over $101 A Barrel Over Tensions With Iran

Oil prices climbed 2% to over $101 a barrel on growing U.S. consumer confidence and tension in the Middle East. This comes as Iran has promised to close the Strait of Hormuz and block oil exports if the West imposes sanctions on its oil shipments over it’s nuclear program. The Strait of Hormuz is a passage connecting the Gulf of Oman to the Persian Gulf and is the route for one third of the world’s oil-tanker traffic.

While Iran’s naval forces were in the midst of a 10-day war games exercise in the Arabian Sea and Gulf of Oman, Iranian Vice President Mohammad Reza Rahimi issued a warning saying “If Iran oil is banned not a single drop of oil will pass through Hormuz Strait,” and “We are not interested in any hostility”.  He continued on about how the West was plotting against Iran even though “Our motto is friendship and brotherhood”.

The Washington Post reported “Benchmark crude rose $1.66 to finish at $101.34 per barrel. Gasoline was flat at $2.6888 a gallon. Heating oil rose 2 cents to finish at $2.9085 a gallon. Natural gas was virtually unchanged at $3.1120 per 1,000 cubic feet. On the ICE Futures exchange in London: Brent crude rose $1.31 to finish the day at $109.27 per barrel.”

The rise in prices over the past week is being attributed to encouraging U.S. economic news pointing to stronger future demand. The New York-based Conference Board said its Consumer Confidence Index jumped close to 10 points from November, to 64.5. It’s a level that hasn’t been seen since April and was near a post-recession peak.