Oil pulled back from the brink of $100 per barrel as Libya is on the brink of civil war. Bloomberg News reports, “The U.S. has made contact with and will offer assistance to opponents of Muammar Qaddafi’s regime who control the eastern part of Libya and are making gains in the west. While opposition leaders began planning a provisional government, U.S. Secretary of State Hillary Clinton said for the first time today that the U.S. has begun “reaching out” to Libyans organizing for a post-Qaddafi era. “We’ve been reaching out to many different Libyans who are attempting to organize in the east and, as the revolution moves westward, there as well,” Clinton told reporters traveling with her to Geneva for consultations tomorrow with foreign ministers. “I think it’s way too soon to tell how this is going to play out, but we’re going to be ready and prepared to offer any kind of assistance that anyone wishes to have from the United States,” she said.
U.S. involvement may ease some concerns but raise others. Libya is boiling over but the rest of the region continues to simmer. If any hot spots blow off, then the oil price will be off to the races. The biggest fear is that the unrest can spread to the world’s biggest oil producer Saudi Arabia. The AP Reported that, "More than 100 leading Saudi academics and activists are calling on the oil-rich country's monarch to enact sweeping changes, including setting up a constitutional monarchy, as mass protests that have engulfed other Arab nations lapped at Saudi Arabia’s shores. The statement seen on several Saudi websites Sunday reflects the undercurrent of tension that has simmered for years in the world's largest oil producer. While King Abdullah is seen as a reformer, the pace of those changes has been slow as Saudi officials balance the need to push the country forward with the perennial pressure from hard-line clergy in the conservative nation.” This follows last week’s news that a Facebook site is calling for a day of rage in Saudi Arabia. If unrest spreads to Saudi Arabia this could be a worst case scenario.
Unrest in another OPEC country. The Iranian government continues to murder its own people. Last week I wondered where the outrage was. This week Reuters reports that, “United States on Sunday accused Iran's government of hypocrisy and "blatant" violations of the rights of its citizens.”The United States strongly condemns the Iranian government's organized intimidation campaign and arrests of political figures, human rights defenders, political activists, student leaders, journalists and bloggers," the White House said in a statement. "The Iranian government also continues to deny its citizens access to information by jamming satellite transmissions and blocking Internet sites," said the statement, which was issued by White House National Security Council spokesman Tommy Vietor.” The United States slapped financial sanctions on two Iranian officials on Wednesday for what it said were human rights abuses against protesters following Iran's disputed presidential election in 2009.
U.S. officials have recently suggested that Iranian authorities were hypocritical for clamping down on protesters in their country while applauding the demonstrations in Egypt that toppled its leader, Hosni Mubarak, a longtime U.S. ally. "The United States and the world will continue to bear witness to the Iranian government's blatant violation of the universal rights of its citizens and its ongoing hypocrisy," the White House statement said.
The oil market is trying to regain calm. We see the market settling just a bit and we are relieved that unrest has not spread across the region over the weekend. Still this is a very dangerous situation and the market could turn back around and fly on a dime. The situation is changing constantly and be prepared for another week of volatility.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at email@example.com.