Iran didn't close the Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea, but rumors that it did were enough to send oil prices skyrocketing on Tuesday. ZeroHedge reported the strait was closed, which Business Insider says "was enough to send traders scrambling." It's still a little unclear whether the government of Mahmoud Ahmadinejad plans to shut down the strait during a war games exercise, as one politician announced. If it did, the oil markets would have good reason for concern, as one sixth of the globe's oil moves through that waterway. The confusion started on Monday, when lawmaker Parviz Sorouri threatened to close the strait in order to send a message, Bloomberg reports via the San Francisco Chronicle. "if the world wants to make the region insecure, we will make the world insecure," parliamentarian Parviz Sorouri said. But the report of his comments in the Iranian press was later removed. Still, when the news hit oil markets on Tuesday, it sent them into a tizzy, BusinessWeek reports:
Crude for January delivery gained $1.91, or 2 percent, to $99.68 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Earlier, futures touched $101.25 a barrel. Prices have risen 9.1 percent this year.
Brent oil for January settlement increased $2.07, or 1.9 percent, to $109.33 a barrel on the London-based ICE Futures Europe exchange.
A spokesman for Iran's foreign ministry said on Tuesday the strait wasn't closed, and said the threat that it would be was "made by people who don’t have an official title," according to BusinessWeek.