Prepare for Iran’s Energy Market Chaos with the United States Oil Fund LP (NYSE: USO)

Iran kicked off the New Year with aggressive messages for the Western world, setting the stage for heightened political tensions and a huge oil price push in 2012.

Oil futures finished at their highest level in eight months yesterday (Tuesday), with West Texas Intermediate crude jumping 4.2% to settle at $102.96 a barrel on the on the New York Mercantile Exchange (NYMEX).

The surge came after Iran warned a U.S. aircraft carrier to stay out of the Persian Gulf. The message fueled speculation that Iran will make good on its threat to close the Strait of Hormuz to oil tankers.

An average of 14 supertankers carrying one-sixth of the world’s oil shipments every day pass through the Strait, a narrow channel which the U.S. Department of Energy calls “the world’s most important oil chokepoint.”

With global oil demand expected to rise to a record 89.5 million barrels per day in 2012, a major disruption to oil exports from Iran would drastically affect pricing.

Even though Iran has made such threats repeatedly over the past 20 years, tighter sanctions imposed by the United States and Europe may have pushed the country to its breaking point. Iran just concluded a 10-day military exercise intended to prove to the West that it can choke off the flow of Persian Gulf oil whenever it wants.

Now Iran is expected to trigger oil market performance similar to spring 2011, when Libya’s civil war caused oil prices to spike close to $115 a barrel.

In fact, if the Iranian government made good on shutting down the Strait, oil prices would probably shoot up $20 to $30 a barrel within hours and the price of gasoline in the United States would rise by $1 a gallon.

While we can’t control Iran’s actions, we can control how we prepare for whatever political and economic turmoil it inflicts. That’s why it’s time to buy the United States Oil Fund LP (NYSE: USO).

Global Political Tensions Will Bolster US Oil Fund

Iran is trying to scare the world out of imposing more sanctions against it, which drastically limit the country’s ability to conduct business.

The latest sanctions, signed into law by U.S. President Barack Obama last Saturday, will make it far more difficult for refiners to buy crude oil from Iran, the world’s fourth-largest oil exporter.

Tehran has slowly been isolated from the global economy after decades of increasingly strict regulations. One of its only steady relationships was an energy trade with Europe. Iran sold crude oil to the European Union (EU) in exchange for gasoline imports, which provided 50% of Iran’s gasoline needs.

But now increasing political strife has deteriorated that arrangement.

The EU next month will consider an embargo of Iranian oil, which also means the end of refined gasoline exports from Europe to Iran.

Iran-EU relations started to fall apart in November when Britain cut business transactions with all banks in Iran, including the central bank, in response to news that Iran was building nuclear weapons. Then Iranians on Nov. 29 stormed two British Embassy compounds in Tehran to protest the sanctions, screaming “Death to Britain” and destroying British flags.

This attack not only brought back images of the American embassy staff that was held hostage for 444 days in 1980, but also greatly increased the chances of a military attack this year involving Iran and the Western world.

Now the British have closed down their embassy in Tehran, and have ordered the Iranians to close their London-based embassy. Norway also decided to close its embassy in Tehran, and Germany and France have recalled their respective ambassadors for consultations.

All this, in my opinion, could be the prelude to bombing attacks.

While the world has waited for Israel to start a unilateral bombing campaign to hit Iranian nuclear facilities, I now think that it could be done by North Atlantic Treaty Organization (NATO) countries.

A bombing campaign to disrupt the Iranian nuclear facilities would also be a catalyst for higher oil prices. Such a military move will include attacks on Iran’s oil production and refining capacity. This will drive up oil prices significantly for a short-term spike.

While Saudi Arabia can increase its oil output in the near term, that won’t last. We want to be exposed to the United States Oil Fund LP before anything drastic happens, because the market will react suddenly.

The Fund has climbed about 28% since October. It rose 4.15% yesterday to close at $39.69.

The Looming 2014 Stock Market Crash

This 1 signal could spell complete disaster for the market. See the system that has detected 22 out of 24 major market tops and bottoms since 1970 - including the dot.com bust in 2000 and the real estate bubble in 2008. When most investors retirement accounts are getting decimated, you could be on the right side of this massive move.

The next signal could come at any time.

Click here to sign up for FREE!



Your Guide to Financial Freedom

We’re in the midst of the greatest investing boom in almost 60 years. And rest assured – this boom is not about to end anytime soon. You see, the “flattening of the world” continues to spawn new markets worth trillions of dollars; new customers that measure in the billions; an insatiable global demand for basic resources that’s growing exponentially ; and a technological revolution even in the most distant markets on the planet.

And Money Morning is here to help investors profit handsomely on this seismic shift in the global economy. In fact, we believe this is where the only real fortunes will be made in the months and years to come.

The bottom line is this: With U.S. influence slipping, and the dollar declining as well, investors who think too narrowly about this transformation will face years of meager returns. But those who embrace this new global reality can make themselves very wealthy.

Consider what the World Bank and the prestigious McKinsey Global Institute recently concluded in their yearly reports on global finance; # From 2005 to 2010 alone, worldwide wealth will soar from $118 trillion to more than $200 trillion – with the newly capitalist markets of Asia and Europe accounting for the biggest share of that gain.

# Over the next 25 years, America’s share of the worldwide economic pie will slip from 28% to 24%… # Even as Asia’s share almost doubles ;which means it will account for a whopping 55% of the global economy by 2030.

Unfortunately, without guidance, few investors will be able to capitalize on this once-in-a-generation opportunity with knowledge and safety.

That’s where Money Morning comes into play;

You see, one sad fact remains true on Wall Street: If you’re not a partner in, or client of, a major investment bank – or if you don’t have a securities portfolio worth $5 million or more – you are most likely out of luck.

The big brokerage firms are making a killing on the global boom. Yet Wall Street reserves the timeliest information – and the best profit opportunities – for its partners or wealthiest clients.

And the Securities and Exchange Commission doesn’t help the everyday investor much either. The second sad fact is this: While you can buy any U.S. or Canadian stock you want, the SEC prohibits you from purchasing many of the available international stocks.

The reason: Foreign companies that haven’t registered with the SEC are off-limits to most U.S. individual investors.

And with Sarbanes-Oxley discouraging foreign firms from listing their shares on U.S. indexes, fast-growing companies from abroad have had little incentive to care!

Yet Money Morning can help change all this for investors intent upon making sizeable, steady and safe gains – and who want to capitalize on the biggest profit opportunity we’re likely to see in our lifetime.

We exist to even the playing field; to help you reclaim control of your own financial destiny. Our worldwide research staff includes former investment bankers, international financiers, emerging markets specialists and veteran financial journalists.

Our experts know that certain capital flows essentially act as a “leading indicator” of future profit opportunities. These are opportunities that you won’t be reading or hearing about anywhere else. Each weekday morning, in a readable style you can digest in just a few minutes, you will reap the benefits of our research and expert experiences. Indeed, Money Morning will bring you:

# The latest reports on China, Japan, Emerging Europe, and the other global hot spots where most investor wealth will be created in the months and years to come… # Reports on companies you’ve likely never heard of – even though they’re poised to sell billions worth of their wares to “new middle class” customers around the world… # Information on the U.S. companies shrewd enough to cash in on this boom in global;

# The latest developments in banking, interest rates, foreign investment and other global investing topics; # Advice on how to invest in currencies, precious metals, commodities and energy

# Inside news on the hottest investments, including water, uranium and private equity… # And news on rules and regulations, financial trends and strategies – and any other “market intelligence” that you will need to become a shrewd-and-successful investor in the greatest global investing boom most of us will ever see.

And it’s all delivered directly to you – and at no charge.

Here’s to securing your financial freedom in the new global economy.

Good Investing,

Mike Ward