Oil prices are down since last year overall, mostly because the political risk has been removed from pricing.
Last night, though, a rumored Iranian attack on a U.S. ship in the Persian Gulf showed how quickly markets can flip if oil supply is threatened.
Immediately, the political risk of tightened oil supply found its way into the price of oil.
Within minutes of the rumor, oil prices jumped more than $5 per barrel to cross the $68 level. Only after the U.S. military refuted the story did prices retreat.
Higher oil prices create higher costs for Americans in many facets of life including gasoline bills, heating and cooling costs, and energy bills.
Higher oil prices increase costs on business and consumers and that is considered to be inflationary, which generally leads to higher mortgage interest rates.