Oil Prices Rise on EU Embargo, Iran Threat

It’s probably no surprise that the European Union’s decision to begin an immediate embargo on new oil contracts with Iran and the EU’s agreement to freeze Iranian funds generated responses from Iranian politicians threatening to close the Strait of Hormuz. Even less surprising is that oil prices would rise on such developments.

Crude oil did rise today, with both WTI and Brent adding more than 1% to the cost of a barrel. WTI is up the most, nearly 1.5%, at $99.79/barrel and Brent is up nearly 1.1% at $110.94.

Those represent higher than usual gains in the price of crude, but if Iran’s naval war games scheduled for next month are moved up and if Iranian politicians.get more strident in demands to close the Strait of Hormuz, prices could rise dramatically. A serious threat to nearly 20% of the world’s supply of crude could add more than $25 to the price of a barrel of crude.