The UN Security Council voteon a Libya no-fly zone has brought joy to anti-Gadaffi rebels and the British/French diplomats that worked for the resolution. But in the oil market, it has raised tensions a notch, with April Brent crude rising on Friday by $1.76 a barrel to $116.66.
The break in the price surge earlier this week – when Brent fell back to $107 on the Japanese disaster – now seems a temporary blip. Oil-importing emerging markets headed by China and India will feel the pain in their inflation numbers.
Whatever military action the UK, France and allies take, it is likely to inflame tensions in the short- and medium-term, even if the move is justified on humanitarian and other grounds. A market already rife with fears of a possible oil supply disruptions has one more set of risks to comprehend. Egypt. Libya. Bahrain. And now more Libya.
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