Oil prices expected to drop with overthrow of Gadhafi government

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Should the Libyan rebels succeed in overthrowing the Moammar Gadhafi’s regime, then market analysts believe that it would affect the global oil prices directly. This came in the wake of the latest development when rebel forces entered Tripoli with minimal resistance where they also overran a major military base which was supposed to defend the city. In the line of fire, Gadhafi’s son, Seif al-Islam was captured and gave fresh speculation that Gadhafi’s government is on the brink of falling.

If that happens, oil prices will surely start dropping which will be good news as oil prices skyrocketed to US$93 per barrel when fighting started. It was traded around US$84 per barrel before that. By the end of April, oil price has reached over US$110. With the country in crisis, some daily 1.5 million barrels of oil which Libya exports have been halted. Although that is barely 2% of the total world demand, its superior quality for European refineries have affected the global oil prices.