Oil begins 2012 with a bang, prices up 4%

Oil prices are soaring as tensions grow over key Persian Gulf oil shipments.

In Tuesday morning trading benchmark crude jumped $3.86, nearly 4 percent, to $102.69 per barrel in New York. Brent crude rose $4.05, or 3.8 percent, to $111.43 per barrel in London.

Prices shot up as commodity exchanges opened for the first day of 2012 trading, driven by concerns that Iran would try to close the Strait of Hormuz to oil tankers, if Western nations impose new sanctions.

Iran warned the United States to stay out of the strategic waterway, where one-sixth of the world's oil shipments pass every day. On Monday its navy fired a cruise missile as part of a military exercise.

Meanwhile, U.S. gasoline prices were flat at a national average of $3.28 per gallon.