Oil jumped 2.4% to settle at $100.14 a barrel yesterday, as investors started toworryabout supply disruption following reports that Iran could hold military drills next to a key oil-shipping channel. Iran has been playing their cards close to their vest, as western nations began to place embargos and sactions on business with Iran, in response to the Iranian nuclear threat.

A highly placed Iranian office said yesterday, that the military was set to practice its ability to close the Gulf to shipping at the narrow Strait of Hormuz, the most important oil transit channel in the world, but there was no official confirmation.
This statement was to let the world know, that if they continued their sanctions and embargos, that Iran had the military ability to close the Strait of Hormuz in retaliation.

By volume, the Strait of Hormuz leading out of the Persian Gulf and the Strait of Malacca linking the Indian and Pacific Oceans are the two most strategic chokepoints.

The global energy market is dependent upon reliable transport. The stoppage of a chokepoint, even for short periods, can lead to substantial increases in total energy costs. In addition, chokepoints leave ships vulnerable hijacking, and Geo-political and terrorist attacks

Situated  between Oman and Iran, the Strait of Hormuz connects the Persian Gulf the Arabian Sea. Hormuz is the world’s most important oil chokepoint due to its daily oil flow of 15.5 million barrels in 2009, down from a peak of 17 million bbl/d in 2008. Flows through the Strait in 2009 are roughly 33 percent of all seaborne traded oil (40 percent in 2008), or 17 percent of oil traded globally.

At the same time, a report from the American Petroleum Institute showed that crude-oil inventories rose 462,000 barrels in the week ended Dec. 9.The API report comes ahead of the more closely-watched official data by the Energy Information Administration, due Wednesday.

It seems that the markets are more worried about a strangehold on oil shipments then on crude-oil inventories.

News and data, rumor and inuendo, have tremendous effects on the markets and profits. A surge in oil prices even for a short time, can have devastating effects on currency value. The collection, analysis and comprehension of this information, can be better handled by a professionally managed account.

Based on this news, Oil surged nearly $4 a barrel on yesterday,  citing renewed jitters over Iran’s comments. Brent and U.S. crude prices shot up quickly briefly adding $3 on to earlier gains as volumes surged. This market reaction, was also caused by some erroneous news picked up around that world that Iran had actually closed the Strait. This was incorrect and retracted later in the day.

A managed forex or futures account professional can quickly interpret and verify the news, but can also react quickly to find profit even in shortlived news stories. As investors were feverously buying oil, and driving up the prices a good managed account provider would already be selling your positions. Managed Accounts are the leaders in the market place, not the followers.

“ If it is a major disruption that drives prices higher, for example Iran attempting to block the Straits of Hormuz then we would expect prices to move north of $150 a barrel in very quick fashion. We do not, however, expect them to stay there for very long, as that level is simply too much of a burden for the global economy and we would expect a global recession to be the result, taking oil demand and prices much lower.” from the telegraph uk