OPEC Prepared to Pump More Oil; Qaddafi Vows to Fight to "Last Drop of My Blood"; Massive Shiite Protest in Bahrain

Libyan chaos has now turned into a civil war as expected. President Qaddafi vowed to “fight until the last drop of my blood”, which of course proves what little concern he has for the citizens of his country. Then again, that is how 30-year dictators stay in power, so the only thing new is the candid arrogance of his statement.

Dice Have Been Thrown

I highly doubt Qaddafi lasts long. Someone in the military is likely to take him out, sooner rather than later, assuming he does not voluntarily flee.

What kind of government eventually gets in power is the key question, and no one has the answer to that. When it comes to civil wars in military dictatorships, history is not often kind. The dice have been thrown but they have not yet landed.

As oil-related companies exit Libya, crude prices spiked. However, Saudi Arabia has offered to step up production. In other regional news Shiites have stated a huge protest in Bahrain.

Rounding out the news, the Nasdaq closed down over 3% and the S&P 500 closed down over 2%. Corn, wheat, soybeans, oats, and rice all finished limit down, while Brent crude barely finished in the green. Here are some details.

OPEC Prepared to Pump More Oil

The New York Times reports Saudis, Trying to Calm Markets, Say OPEC Is Ready to Pump More Oil

“OPEC is ready to meet any shortage in supply when it happens,” the Saudi oil minister, Ali al-Naimi, said at a news conference after a meeting of ministers of oil producing and consuming nations in Riyadh, Saudi Arabia. “There is concern and fear, but there is no shortage.”

The intensifying turmoil in Libya drove oil prices sharply higher again on Tuesday, in part because at least 50,000 barrels a day of output had already been suspended. That is only a fraction of what Libya produces, but with foreign oil companies beginning to shut down operations and evacuate workers, the price of Brent crude, a benchmark traded in London, rose to more than $106 a barrel on Tuesday.

Libya sends only a small fraction of its oil to the United States, but since oil is a world commodity, Americans are not immune to the price shock waves.

Refineries on the East and West Coasts, for example, depend on Brent crude, meaning that the higher prices paid by Europeans are also pushing up gasoline and heating oil prices paid by many New Yorkers, New Englanders and other Americans.

Tom Kloza, the chief oil analyst at the Oil Price Information Service, estimated that the Saudis could pump an additional million to million and half barrels of oil in a matter of days. As the largest producer, Saudi Arabia is by far the most influential member of the Organization of the Petroleum Exporting Countries, with a reserve capacity to deliver an additional five million barrels to the world markets after several weeks of preparation. That is roughly three times more oil than world markets would lose if production were halted completely by unrest in Libya.

“Unless this unrest spreads to the streets of Jeddah and Riyadh,” Mr. Kloza said, “I think it’s a very manageable situation and prices are closer to cresting than they are to exploding higher.”

I am very much inclined to agree with energy analyst Tom Kloza who says “Unless this unrest spreads to the streets of Jeddah and Riyadh. I think it’s a very manageable situation and prices are closer to cresting than they are to exploding higher.”

The key of course is whether protests spread to Iran, Saudi Arabia or other oil exporters.

Qaddafi Vows to Fight to "Last Drop of My Blood"

Opposition forces have captured a number of Libyan cities yet Defiant Qaddafi Vows to Fight

Libya appeared to slip further into chaos on Tuesday, as Col. Muammar el-Qaddafi vowed to “fight until the last drop of my blood” and clashes intensified between rebels and his loyalists in the capital, Tripoli.

Opposition forces claimed to have consolidated their hold over a string of cities across nearly half of Libya’s 1,000 mile Mediterranean coast, leaving Colonel Qaddafi in control of just parts of the capital and some of southern and central Libya, including his hometown.

Witnesses described the streets of Tripoli as a war zone. Several residents said they believed that massacres had taken place overnight as forces loyal to Colonel Qaddafi drove through the streets opening fire at will from the backs of pickup trucks.

“They would drive around, and they would start shooting, shooting, shooting,” said one resident reached by telephone. “Then they would drive like bandits, and they would repeat that every hour or so. It was absolute terror until dawn.”

With the Internet largely blocked, telephone service intermittent and access to international journalists constrained, information from inside the country remained limited, and it was impossible to determine whether the demonstrations were staged.

The rebellion is the latest and bloodiest so far of the uprisings that have swept across the Arab world with surprising speed in recent weeks, toppling autocrats in Egypt and Tunisia and challenging others in Bahrain and Yemen.

Opponents of Colonel Qaddafi had tightened their control of cities from the Egyptian border in the east to Ajdabiya, an important site in the oil fields of central Libya, said Tawfiq al-Shahbi, a protest organizer in the eastern city of Tobruk.

A growing number of Libyan embassies around the world, including in neighboring Tunisia, have also raised the country’s pre-Qaddafi flag — now considered the banner of the revolt. Libyan diplomats around the world — including Libya’s ambassadors to the United States, India and Bangladesh — said they had resigned to protest the bloody crackdown.

International condemnation of the violence continued to build. “Now is the time to stop this unacceptable bloodshed,” said Secretary of State Hillary Rodham Clinton in a statement.

The chaos, meanwhile, rippled through Libya and the region. The Italian oil company ENI confirmed that it had suspended use of a pipeline that goes from Libya to Sicily and provides 10 percent of Italy’s natural gas, and Turkey and European nations stepped up the evacuation of their citizens.

An exodus from Tripoli had begun, a witness said, and the freeways were crowded with cars and pedestrians trying to flee. Inside the capital, people waited for hours to buy fuel and bread.

There are many more details in the above story. Inquiring minds may wish to read the above link.

Massive Shiite Protest in Bahrain

The New York Times reports In Bahrain, Shiites Turn Out to Protest

MANAMA, Bahrain — More than 100,000 protesters poured into the central Pearl Square here on Tuesday in an unbroken stream stretching back for miles along a central highway in the biggest antigovernment demonstration yet in this tiny Persian Gulf kingdom.



In a nation of only a half a million citizens, the sheer size of the gathering was astonishing. The protest, organized by the Shiite opposition parties, began in the central Bahrain Mall, two miles from the square and seemed to fill the entire length of the highway between the two points.

Security forces were nowhere to be seen along the demonstration route. The Ministry of the Interior, which has been regularly providing updates on the situation in the capital via its Twitter feed, issued a terse acknowledgment of the protest: “Sheikh Khalifa Bin Salman towards Manama is now closed.”

Since the fall earlier this month of President Hosni Mubarak in Egypt, the Sunni royal family in Bahrain has struggled to hold back a rising popular revolt against their absolute rule.

Bahrain is a close ally of the United States in the region, and the Navy’s Fifth Fleet is based here, helping ensure the flow of oil through the Strait of Hormuz and the gulf and safeguarding American interests.

Washington’s posture toward the Shiite majority, which is spearheading the opposition, could prove crucial to future relations with this small but strategically valuable nation.

Over the years, the American military, the advisers and the human rights advocate said, believed that King Hamad bin Isa al-Khalifa and his court were reform-minded leaders who could advance democracy and preserve stability. That narrative contrasts sharply with the experience of the Shiites, as documented by human rights groups and some of the military’s own advisers.

In Bahrain, as in Egypt and Tunisia, the United States finds itself again torn by its desire to preserve relations with autocratic leaders who back American foreign policy interests and by the danger of further alienating Arab public opinion by failing to promote democracy. At the moment, feelings toward the United States are neutral, and in some circles even positive, but they could slip toward hostile, opposition advocates said.

Excellent Coverage by New York Times

The New York Times coverage of these events, including Egypt, has been exemplary, by far the best in the mainstream media. I have used a lot of their content. All three articles above are from the NYT.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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