Investors, who had undertaken long positions in crude oil just a few days ago, must be smiling with glee as the commodity shot up yesterday. Oil prices attained a high price of NPR 7737.75 per barrel on Tuesday to a possible supply disruption ensuing from a possible confrontation between the US and Iran. Investors opine that the February contract needs to break out past the most recent high for a drive towards higher prices.

The counterpart, Brent crude oil prices, remain in an upswing as well, hitting a session high of NPR 8433 per barrel, and a close above NPR 8219 signals an emerging bull run, according to technical analysis. In regards to the Brent crude, the next key level that investors could watch is NPR 8452.5 according the 200-day moving average.

The fundamentals also provide a possible green signal to the bullish trend of oil as traders hail Iran as the next Libya. Why? Just as the civil war in Libya caused the crude oil prices to enhance to near NPR 8625 a barrel in 2011, the swelling tensions between Iran and the West could cause oil prices to reach those levels again in the coming days. Iran, according to the 2011 BP statistical Review, is the world’s fourth largest oil producer, with production at 4.245 million barrels daily in 2010.

Yesterday, Iran’s army chief warned the US Navy not to return an aircraft carrier back to the Persian Gulf after it was removed due to Iran’s naval exercises in the area. Iran’s threat comes after it test fired missiles in the Strait of Hormuz over the weekend and the US formalized extending sanctions on any entity dealing with the Central Bank of Iran. The euro-zone nations should decide by the end of the month whether to place a restriction on Iranian oil imports.

Iran has said it could close down the Strait of Hormuz, a major getaway that the EIA terms ‘the world’s most important oil chokepoint due to its daily oil flow of almost 17 million barrels in 2011.’ The Iranian Rial is already feeling the heat of a possible ban-with the currency falling 40% vs. the Dollar in the past month.

In this time of chaotic environment and escalating tensions, investors are unlikely to give up their long positions in oil. So is Iran really the New Libya? Only time will tell!