Noted by the FT’s Jamie Chisholm early on Thursday — a $3 sell-off in Brent, on reports of a survival plan for Gaddafi ‘peace plan’ for Libya:
A very odd peace plan, and a grimly amusing oil price reaction.
First of all, this seems to have started with noted world statesman (and Gaddafi ally) Hugo Chavez — who talked to what’s left of Libya’s regime on Tuesday about setting up a Peace Commission. That’s Hugo Chavez, everyone.
As soon as the market realised this, prices recovered. Still, it’s worth noting that the sell-off began with a Reuters story that Amr Moussa, president of the Arab League, had given his backing to a peace plan.
Well, consider:
- The Arab League has also said it might consider establishing a no-fly zone over Libya. Now, about that…
- The Arab League would have no United Nations authorisation for either a no-fly zone or peace talks. Security Council Resolution 1970 seems pretty clear on who’s in the driving seat on next steps for the Libyan situation (and thus, for a pressured oil market):
“27. [The Council] Affirms that it shall keep the Libyan authorities’ actions under continuous review and that it shall be prepared to review the appropriateness of the measures contained in this resolution, including the strengthening, modification, suspension or lifting of the measures, as may be needed at any time in light of the Libyan authorities’ compliance with relevant provisions of this resolution;“28. Decides to remain actively seized of the matter.”
A little less market attention to Arab League rhetoric and a bit more to UN resolutions, perhaps. In the meantime, a revealing sign of just how febrile oil prices have become, no?
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