Oil Prices Rise on Middle East Unrest

Oil prices rose on Thursday to near the $100 mark on reports of violence in Iraq and a planned Iranian war game.

The price of oil was also pushed upward by improving U.S. economic news, including higher-than-expected consumer sentiment in December and falling jobless claims.

U.S. February crude jumped 90 cents to $99.57 per barrel after reaching a high of $99.87. Brent February crude rose 46 cents to $108.17 per barrel. Trading volumes were light. The oil price increase was different than a week ago when Europe concerns pushed prices below $100.

But coordinated bombings in Iraq that killed more than 60 in the nation's capital primarily pushed oil prices higher Thursday, as fears rose that the country could erupt in internal warfare. The attacks -- at least a dozen were reported -- were made with car bombs and other explosive devices and lasted for two hours.

Meanwhile, oil also rose on a report hinting at further Middle East unrest involving Iran's planned war game. An Iranian television station quoted an Iranian navy commander as saying that the Iranian military will conduct a 10-day war game starting on Saturday in an area near the Strait if Hormuz.

The Strait of Hormuz is a vital passage for the world's oil tanker traffic, as nearly one-third pass through it.

A narrow waterway between the Gulf of Oman and the Persian Gulf, the Strait of Hormuz has Iran to its north coast and the United Arab Emirates on the south coast. It's critical to oil-reliant countries since it is a strategic choke point, allowing more than a dozen tanker carrying millions of barrels of crude to pass through daily.

The Strait of Hormuz has been in the news recently because the price oil spiked earlier this month after rumors that Iran might close the Strait of Hormuz, disrupting supplies from the Persian Gulf. To get through the Strait, tankers must pass through Iran's territorial waters.

Iran and the broader Middle East, including Iraq now that the United States is gone, will continue to act on the oil market with exposure for price spikes at anytime. The geopolitics of the region are once again on the radar, said Dominick Chirichella, analyst at New York's Energy Management Institute, according to Reuters.

In the U.S., it was positive news that contributed to oil's climb back to near $100 a barrel. Claims for unemployment benefits fell in the previous week, according to a government report, to the lowest level in three-and-a-half years. Also, U.S. consumer sentiment jumped in December to its best level in six months.

ccording to a Thomson Reuters/University of Michigan survey, consumer sentiment rose from 69.9 in December from a reading of 64.1 in November.