Oil Market Smells a Rat

Libyan rebels, we are told this morning, have captured Col. Muammar Gaddafi’s stronghold in the Libyan capital, Tripoli.

Libyan Rebels Take Tripoli

On the news this morning, the Dow rallied 125 points and is close to 11,000 again after Friday’s late-day sell-off.

Nothing like a little regime change to take our minds off the prospect of total economic collapse this morning, eh?

So far the undeclared Libyan war has cost the US alone an estimated $6.6 billion – a drop in the bucket of a $3.8 trillion annual budget.

But the oil market is sniffing a rat.

With two drawn-out, unaffordable, imperial wars already under way…in addition to the three covert wars in Yemen, Somalia and Pakistan…how long’s it going to take and how expensive will it be to “wage the peace” in Libya now?

Getting Libya’s 1.3 million barrels a day of light sweet crude production back online will be no small task, either.

As a result, a barrel of West Texas Intermediate is $83.40 this morning – up nearly 1.5% from Friday.

File Libya under “unresolved issues.” We’re kicking Monday off with a bunch of them this week.

Israel and Egypt, at peace since 1979, are tiptoeing closer to conflict this morning too.

Last week, while Israel was mixing it up with Hamas in the Gaza Strip, Israeli troops shot and killed five Egyptian soldiers just across the Gaza-Egypt border. Israel says it “regrets” killing the Egyptians. Egypt calls the matter “unacceptable” and is threatening to withdraw its ambassador to Israel.

As we’ve pointed out before, the new military government in Egypt is trying to stay on the good side of the Egyptian people in part by taking a tougher line with Israel. Well worth keeping an eye on.

Addison Wiggin
for The Daily Reckoning

The Daily Reckoning