Daily Benefactor News – Oil Reaches $100 A Barrel As Libya Standoff Worsens

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Oil Reaches $100 A Barrel As Libya Standoff Worsens – Reuters

Oil surged to a 28-month high of $100 a barrel on Wednesday as escalating violence in OPEC producer Libya slashed output there and investors bet the unrest could spread to other oil exporters.

Brent has posted the biggest three-day gain since October 2009, rising to as much as $111.85 a barrel. That marked its highest since October 2008, shortly after the collapse of U.S. investment bank Lehman Brothers.

U.S. crude has shot up more than 15 percent since Friday.

West Texas Intermediate futures rose 3.7 percent to $99 a barrel as of 1:37 p.m. EST in New York, paring some earlier gains. Brent gave up some of its earlier advance to trade up 5.1 percent at $111.18.

A lethal political standoff between Libyan strongman Muammar Gaddafi and rebel factions now in control of oil-rich eastern Libya has already cut output in the world’s No. 12 crude exporter by more than 25 percent, or 400,000 barrels a day, according to Reuters calculations.

The price surge raised concern about the impact of costly fuel on a fragile U.S. economic recovery and dragged U.S. equities lower. A jump in oil to a record $147 a barrel during 2008 led to demand destruction and contributed to the deepest global economic downturn since World War Two.

Traders are weighing the risk that popular revolts, which have been sweeping across North Africa since January, could spread to exporters in the Middle Eastern Gulf.

“Oil prices are not likely to fall any time soon,” said Shelley Goldberg, commodities and energy strategist at Roubini Global Economics in New York.

“It’s not all about Libya, but a fear these movements will spread further across the Middle East and North Africa region. We’re no longer in the early stages of uprisings, but we’re probably somewhere in the middle stages, with more ahead.”

The possibility that protests could expand in Bahrain or potentially into neighboring Saudi Arabia, OPEC’s top oil exporter, helped push prices higher.

While the kingdom has faced no tumult to date, hundreds of people on Wednesday backed a Facebook page campaigning for a “day of rage” across Saudi Arabia next month.

“Saudi Arabia is nervous about potential opposition too and the market senses that,” said Gene McGillian of Tradition Energy in Connecticut.

Traders were also watching for signals that Saudi Arabia, which controls much of global spare production capacity, would pump more oil to compensate for Libya’s lost output. Its oil minister has said the kingdom and other OPEC members would be ready to act should any shortfall develop.

“I don’t think Libya alone will take us to $150 a barrel, but, if unrest spreads in the Gulf countries, we could easily get there,” said Edward Meir, an analyst at MF Global in New York.

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Source: Gaddafi Orders Oil Sabotage – Time Magazine

There’s been virtually no reliable information coming out of Tripoli, but a source close to the Gaddafi regime I did manage to get hold of told me the already terrible situation in Libya will get much worse.

Among other things, Gaddafi has ordered security services to start sabotaging oil facilities. They will start by blowing up several oil pipelines, cutting off flow to Mediterranean ports. The sabotage, according to the insider, is meant to serve as a message to Libya’s rebellious tribes: It’s either me or chaos.

Two weeks ago this same man had told me the uprisings in Tunisia and Egypt would never touch Libya. Gaddafi, he said, had a tight lock on all of the major tribes, the same ones that have kept him in power for the past 41 years. The man of course turned out to be wrong, and everything he now has to say about Gaddafi’s intentions needs to be taken in that context.

The source went on and told me that Gaddafi’s desperation has a lot to with the fact that he now can only count on the loyalty of his tribe, the Qadhadhfa. And as for the army, as of Monday he only has the loyalty of approximately 5,000 troops. They are his elite forces, the officers all handpicked. Among them is the unit commanded by his second youngest son Khamis, the 32nd Brigade.

My Libyan source said that Gaddafi has told people around him that he knows he cannot retake Libya with the forces he has. But what he can do is make the rebellious tribes and army officers regret their disloyalty, turning Libya into another Somalia. “I have the money and arms to fight for a long time,” Gaddafi reportedly said.

As part of the same plan to turn the tables, Gaddafi ordered the release from prison of the country’s Islamic militant prisoners, hoping they will act on their own to sow chaos across Libya. Gaddafi envisages them attacking foreigners and rebellious tribes. Couple that with a shortage of food supplies, and any chance for the rebels to replace Gaddafi will be remote.

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The President’s Deafening Silence On Libya – Weekly Standard

After almost a week of escalating violent reprisals against protestors and soldiers who have joined the anti-regime forces, Libya’s Muammar Qaddafi and his sons have yet to quell the uprisings – and the White House has yet to take a public stand. Last night, Secretary Clinton released a statement, and pathetic as it was, it’s more than the president has offered – a president who has spent considerable energy burnishing his image for the Muslim and Arab public.

It is rumored that there are differences within the administration, but it is still unclear who could be counseling silence, or for what purpose. To be sure, the Bush administration neutered Qaddafi with the 2003 invasion of Iraq, leaving him to believe he was next on Washington’s agenda. He dropped his nuclear weapons program and stopped sponsoring terrorism – but Qaddafi is not a U.S. ally, and with his treatment of his Libyan citizens he has shown he is the same old Qaddafi, a danger to his own people as well as the rest of the world.

The Obama administration would do well to exercise some moral clarity regarding a man whose personal demeanor has long symbolized the most repressively autocratic and obscurantist features of Arab political culture – a man who reportedly has now, among other things, dispatched his air force to put down the people he rules. The White House’s silence is perhaps explained by the idea that a public statement will do more harm than good.

“It is remarkable,” says Elliott Abrams, deputy national security adviser handling Middle East affairs in the George W. Bush White House, “that the administration appears to believe at the same time that our government is headed by a Nobel Peace Prize winner who is globally beloved, and that if he states his support for any cause it is immediately doomed or at least damaged. This may be some complex cognitive dissonance, but it appears more like simple confusion.”

The same is true of the White House’s decision to keep its support of Iranian protestors muted, for fear that the Islamic Republic might turn even more vicious. This policy seems to be a result of the Obama White House buying into the “kiss of death” fallacy. This line of thinking holds that since the U.S. is so hated in the Middle East, American support for any political cause in the region can only backfire by undermining the cause.

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