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Gas Prices Set to Rebound as Iranian Tension Increases

The Iranian Parliament has set up a joint committee in a new effort to fight against the crippling sanctions that have been levied against the nation by the European Union. Among their proposed legislation: a bill to restrict the traffic through the Strait of Hormuz.

“…the parliament’s national security and foreign policy commission drafted a bill requiring the government to stop oil tankers from shipping crude through the Strait of Hormuz to the countries that support sanctions against Iran, a commission member said on Monday.”

At first glance, it appears as though we’ve seen this movie before. The Iranian government has threatened to shut down the Strait of Hormuz multiple times in the past, even going so far as to simulate the blockade with a series of war games. But the consideration of actual legislation might add some teeth to the otherwise tired threat – or so the market suggests. Today, wholesale prices jumped up 15 cents per gallon over concerns on this very issue. 

Gas prices have been remarkably low recently over concerns about weakening economies in Europe and the United States. The potential risks of sudden price spikes, on the other hand, have so far gone relatively unnoticed. This makes it an ideal time to lock in gasoline prices at today’s lows, without a need to worry about tomorrow’s highs.

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