As Libya moves towards possible Civil War it is really starting to motor on the fear factor in the Oil Markets. Brent Crude which is used as the benchmark for 70% of trade is up very sharply over the past few days and now at over $107 per barrel.
At over $100 per barrel the price of oil starts causing big dislocations in World Economies. The price of transport goes up and causes inflation, the prices of goods have to go up as retailers can't hold down the rate of margin erosion.
Worse in this case is that the US Dollar will be used as a safe haven. Gold and Silver have gone up, but are not steadying out, albeit at high levels. With a strong dollar and rising oil prices there is no cushion for the World Economy.
As well as hoping the War in Libya can be avoided with Qaddafi leaving for the sake of the people involved, we need the situation to calm down or else the UK and Europe will be pushed back into recession. It maybe that this is the price we will have to pay in the short-term for the benefits of Freedom to accrue to the Mid East in the long-term.