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http://www.ProfitableInvestingTips.com - Effects of the Iranian Crisis on Oil Trading - The most recent effects of the Iranian crisis on oil trading have been a rise in the prices of oil futures. Europe is edging closer to an agreement to forestall a Greek debt default. The US economic picture is slowly brightening. Both of these factors would tend to drive up the prices of oil futures. However, the effects of the Iranian crisis on oil trading may be stronger at this moment. The concern is that Iran may cause problems with shipping in the Straits of Hormuz, the bottleneck of the Persian Gulf. Although the US Navy patrols the area, tanker captains and owners of oil tankers might be concerned about passing through the straits if they expect military activity. Thus traders’ focus has moved from trading a Chinese stock decline or European Central Bank loans to effects of the Iranian crisis on oil trading.
Although Iran does not have the firepower to totally blockage to Straits of Hormuz, any attempt would like bring commercial shipping to a halt. Because Iran holds the Eastern shore of the straits it would not even need to launch a boat but rather threaten to fire rockets or artillery at passing ships. The issue with Iran is that the nation appears to be pursuing nuclear weapons. It is using high tech centrifuges to enrich uranium to levels in excess of what it needs for nuclear power. The country has refused to let international inspection teams in to verify its claims that it is not enriching to weapons grade uranium. Responses have been largely diplomatic until recently when both the European Union and the United States have applied sanctions such as restricting the transfer of funds through their banks and even freezing offshore Iranian assets. Recently the European Union announced that as of July of 2012 it would no longer purchase Iranian oil. In addition clandestine activities carried out against Iran by unknown persons include assassination of nuclear scientists, a computer virus that wrecked high tech centrifuges, and explosions that have destroyed facilities and killed technical staff. With all of this as a backdrop the effects of the Iranian crisis on oil trading have been volatility and recently, increased prices. Traders use both fundamental and technical analysis in trading oil futures. The fundamentals are that there may be a scarcity of oil for the recovering economies of Europe and North America. The technical aspect is that markets may become spooked if things get hot in the Persian Gulf.
A lower level of harassment could also help Iran put pressure on the international community to leave it and its nuclear ambitions alone. All Iran needs to do is inspect every single commercial vessel that passes and delay transit interminably. Persian Gulf oil suppliers such as Saudi Arabia have promised to increase production in response to any reduction in production from Iran. However, oil that cannot pass out of the Persian Gulf ...