The Iranians know that closing the Strait of Hormuz is one of the most powerful forms of leverage that they possess, because the world is deeply dependent on the oil that travels through that waterway.  We don't know exactly how this crisis will play out, because the Strait of Hormuz has never been closed in modern times.  But as I pointed out earlier this month, we were warned that Israel would attack Iran, the global price of oil would rise, and the increase in the price of oil would be blamed on Israel.  And that is precisely what has happened.  Israel has attacked Iran, the global price of oil has been increasing, and many are blaming Israel for what has transpired.  Unfortunately, the truth is that this crisis is just getting started.

On Sunday, it was being reported that the Iranian Parliament "has approved a measure to close the Strait of Hormuz"…

The Iranian Parliament has approved a measure to close the Strait of Hormuz, a critical global oil choke point, after the United States bombed three nuclear sites in Iran, according to Iranian state media on Sunday.

While the Parliament has voted in favor of closing the strait, the final decision rests with the country's Supreme National Security Council, according to state media.

Of course the Iranian Parliament never would have held this vote if the Supreme National Security Council had not already decided what it was going to do.

At a time when the regime is under threat, there is no way that we are going to be shown any signs of disunity among Iranian leaders.

So what does this mean?

It means that the price of oil is going to go higher.

A lot higher.

JPMorgan is projecting that we could see the price of oil hit $130 a barrel in a "worst-case scenario"…

Investors predict a "knee-jerk" reaction, with oil prices expected to spike due to fears of disrupted Middle East supplies. Brent crude, already up 20% over the past month to $79.04, could climb toward $130 per barrel in a worst-case scenario, according to JPMorgan.