As political turmoil and violent social unrest continue to plague Libya, a massive economic mushroom cloud has emerged in the form of unprecedented upward price momentum across the broad spectrum of commodities.
Reaching levels not seen since the 2008 energy crisis, the price of crude oil has exploded as concerns mount over the security of Libya’s 1.2 million barrels a day of oil exports.
Inflaming the situation further was a state television broadcast in Libya Sunday evening that portrayed Saif al-Islam Gaddafi vehemently warning protesters that they are tempting civil war, a potentially bloody conflagration that threatens Libya’s oil wealth. This threat particularly struck nerves in Libya as the unemployment rate in the Arab nation already stands at an estimated – and staggering – 20%.
The death toll in Libya surpassed 200 last weekend as bloodshed continued to follow an uprising that saw an angry mob of protesters clash with Libyan security forces in the streets, a clear indication that dictator Moammar Gadhafi’s 42-year reign of autocratic authority may soon end.
“Libya is a significant producer and exporter of good quality crude oil and threats by the tribal leader to stop production is worrisome,” Christophe Barret, an oil analyst at Credit Agricole Corporate and Investment Bank, tells Reuters.
Brent crude – a global benchmark for petroleum prices – spiked 3.1% to $105.70 a barrel in London on Monday, the highest price recorded in well over two years.
According to a report Monday evening in the Washington Post, officials from around the world – including Saudi Arabia and the United States – are meeting in Riyadh, Saudi Arabia to discuss curbing runaway crude oil prices.
As fear entered the markets to a rarely observed extent, spot gold climbed to $1,400.40 an ounce Monday while silver touched a 31-year high and palladium similarly capped 10-year record highs.
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