A little over a month ago in the midst of Egyptian unrest, I warned that U.S. policy-makers should “be very afraid” of these developments because of their impact on crude oil prices.
Now that Libya is in flames, its oil output has fallen by at least one million barrels per day from 1.6 million since the uprising began. While this amount of production is small compared to total global production, it has nevertheless had an impact in pushing up crude oil prices. April crude oil contracts reached $106 per barrel on markets in Asia on Monday, and London futures contracts for Brent crude reached $117.20 a barrel.
Libya is not the only problem. The Saudi leadership is quietly holding its breadth for the upcoming March 11th “Day of Rage.” It is not only holding its breadth, it is deploying up to 10,000 of its security personnel to its northeastern provnces, where Saudi Arabia’s large Shia population dwells.
The key question now is: what will President Obama do if the Saudis massacre their own people? The United States’ reliance on the kingdom’s spare oil capacity is critical for its economic recovery and the prosperity of the American people. But is letting hundreds, if not thousands, of people get slaughtered worth this price?
This could be one of those key moments in a President’s administration when he must choose between the broader interests of humanity and America’s vital national interests.
I do not envy his choice.