Oil prices in the U.S. are below $100 for now, but Brent crude futures —more widely viewed as the global benchmark for oil prices — have been trading over the triple digit mark since last October.
The front month contract is now at the highest price since August 2011 as March Brent crude prices topped $117 a barrel earlier Tuesday morning.
Despite pronouncements by Saudi royalty and oil officials that that country will not let the price of oil go above $100 a barrel, Brent crude prices now appear poised to breach $120 a barrel.
The OPEC basket price has been over $100 since February, when the civil unrest in Egypt and Libyan war began, and closed at $113.41 on Monday.
"I think the Saudis are trying to reassure the market in case of a major geopolitical event, rather than actually lowering the price," says Ray Carbone, president of Paramount Options.
Even if Iran closes the Strait of Hormuz or bans crude oil exports before European Union's embargo takes effect, the Saudis could likely pump enough oil to make up any shortfall in the long run.
"But that probably won't stop a short-term move to the upside for oil," Carbone says.
Saudi Prince Alwaleed Bin Talal Bin Abdualaziz Alsaud told CNBC's Maria Bartiromo on Monday: "We can use our leverage, our excess capacity to be sure to pump more if needed so it will not impact the consumer countries." But he acknowledged that fears come from "what may happen with Iran."
While the Iranian government appears ready to play hardball, it is not the only country that poses a geopolitical risk to global oil supplies. Countries in question include Nigeria, Sudan, Iraq and Egypt.
"Egypt, in particular, changes the dynamic in the Middle East for Israel, which looks increasingly isolated due to the unified front in Lebanon between Hamas and Hezzbollah," says Again Capital founder John Kilduff. "Does this emerging reality increase or lessen the chance of a unilateral Israeli strike on Iran's nuclear installations? We are not sure."
Still Kilduff, who says the rhetoric and positioning in the Middle East is reminiscent of the run-up to the Iraq War in 2003, is recommending clients buy crude oil call options and equity market puts to position for the increasingly likely event-risk of another Arab Spring.
Even as the price of WTI oil futures remains below $100, Carbone says there has been significant interest in "out of the money" call options. Interest is wide spread in April to July WTI crude call option contracts at the $120 to $180 strike price — all calculated bets that oil prices could move sharply higher in that time.
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