Iran's navy will hold 10 days of manoeuvres east of the Strait of Hormuz, state-run Fars news agency reported on Dec. 21, citing Navy Commander Habibollah Sayari. The European Union and the U.S. are seeking support from the Middle East and Asia for sanctions against Iran, which exports more crude than any nation except Saudi Arabia and Russia.

“The market will continue higher due to geopolitical tensions,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “Prices may rise to between $100 and $103 next week.”

Iran's military exercise will start Dec. 24 and cover a distance of 2,000 kilometers (1,240 miles), Fars news agency reported on its website. State-run Press TV reported the manoeuvres would extend east as far as the Indian Ocean.

About 15.5 million barrels of oil a day flows through the waterway between Iran and Oman at the mouth of the Persian Gulf, according to the U.S. Energy Department.

European Union nations, the U.S. and Asia-Pacific allies met in Rome Dec. 20 and discussed possible measures to increase pressure on the country to abandon a suspected nuclear weapons program, according to an Italian Foreign Ministry statement.

Eoin Treacy's view Political upheaval in the Middle East was a catalyst for a surge in oil prices earlier this year, particularly as Libyan supply was curtailed. The potential for Iran to become a flash point next year falls into Donald Rumsfeld's known unknown category. This interview of, former president, Bill Clinton by Bill O'Reilly for Fox highlights the US Administration's alertness to the issue. His allusion to the successful cyber-attack on Iran's nuclear installations this year also suggests that more is happening behind the scenes than the public is privy to.

Brent Crude has posted a progression of lower rally highs since April and has held above the 200-day MA in a comparatively steady reversion. Prices rallied impressively this week, but a sustained move above $115 would be required to indicate a return to medium-term demand dominance. On the other hand a drop below $100 held for more than a week of two would suggest a deeper and potentially lengthy correction is underway.

West Texas Intermediate was much weaker between April and October. However, its rally over the last two months has subsequently been much stronger. Prices have broken the progression of lower rally highs, retested the $100 area and found support this week in the region of the 200-day MA. A sustained move below $92 would be required to question medium-term scope for some additional upside.