Oil rose the most in almost four weeks on reports that Iran was set to begin war games in the Strait of Hormuz , one of the world’s most strategically important chokepoints, which represents about 40% of the world’s seaborne oil shipments.
Just 34 miles wide, thirteen tankers carrying 15.5 million barrels of crude oil pass through the Strait each day, making it one of the world’s most important waterways.
At $100, Nymex crude would still lag Brent crude, which has been at $100 a barrel forever. But it’s a key psychological level for consumers, if nobody else, which don’t need higher energy prices ahead of the holidays.
Exemplified in Tuesday’s price action, Iran’s influence on global crude oil prices is substantial.
Crude advanced as much as 3.6 percent after the state-run Fars news agency reported the military maneuvers will be “soon,”!
“Currently, the Middle East region supplies 70 percent of the world’s energy needs, (most of) which are transported through the Strait of Hormuz. We will hold an exercise to close the Strait of Hormuz in the near future. If the world wants to make the region insecure, we will make the world insecure,” ISNA quoted Sorouri as saying on Tuesday.
Crude for January delivery gained $2.27, or 2.3 percent, to $100.04 a barrel at 12:59 p.m. on the New York Mercantile Exchange, the biggest increase since Nov. 16. Earlier, futures touched $101.25 a barrel. Prices have risen 9.5 percent in 2012.