Oil was the number one political risk in 2008, followed by the Middle East (no. 2 political risk). Part of this was caused by tight market fundamentals that eroded spare oil production capacity, leaving the market without a buffer in the event of disruption which made oil markets much more vulnerable to price shocks. The countries that are most affected by the geopolitics of oil include the major importers (US, Europe, China, Japan) and the exporters (Saudi Arabia, OPEC, FSU, West Africa). Examples of oil and politics include: 2007- Russia/Belarus; 2008 – Russia/Georgia, disruptions in Nigeria; Terrorism; Iran that has threatened to block the 17m b/d Strait of Hormuz, through which 90% of Persian Gulf Exports flow; might Iran hit Iraqi oil production; the whole Middle East is cause for concern. Speculators and oil price: The 2007-08 price actions suggest speculators believed geopolitical risks had risen