Area controlled by Gaddafi shrinking, oil price hits fresh highs

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The area controlled by Libya's embattled leader Col Muammar Gaddafi is shrinking, as the opposition consolidates its gains, report agencies. Witnesses say the capital, Tripoli, is heavily guarded by pro-Gaddafi forces, with tanks deployed in the suburbs. In the capital, sustained gunfire was heard in the eastern suburbs during the night. On Thursday morning, the streets were virtually deserted. Videos on the internet suggest a town 50km (30 miles) west of Tripoli has fallen to anti-government forces. The overall death toll has been impossible to determine. Human Rights Watch says it has confirmed nearly 300 deaths, but the International Federation for Human Rights says at least 700 people have been killed. A French doctor working in Benghazi, Gerard Buffet, said the death toll there was at least 2,000. Libyan leader Moamer Gaddafi on Thursday accused residents of Az-Zawiyah, a town west of the capital hit by fierce fighting between his forces and rebels, of being linked to Osama bin Laden. In what was said to be a live audio feed on state television, Gaddafi also accused the protesters of being on drugs. "You in Zawiyah turn to Bin Laden," he said. "They give you drugs." This was the embattled leader's second television appearance since protests broke out against his 41-year-old rule on February 15. Addressing the older generation, Gaddafi said Al-Qaeda was behind the problem's facing Libya, while the youth were on drugs and misbehaving. Meanwhile, thousands of foreigners are meanwhile still trying to flee Libya through ports, airports and overland. The US, China and many European countries have sent in planes, ships and ferries to help people flee. Oil prices have continued to climb, hitting their highest levels in two-and-a-half years, amid fears the unrest in Libya could spread to larger oil producing nations and disrupt supplies. Brent crude hit $119.79 a barrel in early Thursday trade, before falling back to $116.80. US light crude was up $3.65 at $101.80 a barrel, but earlier it had reached $103.41. Oil firms have been suspending production in Libya this week. France's Total, Spanish oil firm Repsol and Italy's ENI have all partly suspended operations. US President Barack Obama has denounced the Libyan government's actions as "outrageous and unacceptable". Swathes of the country have fallen to opposition control and others into lawlessness, residents and reporters said, as opponents of veteran leader Moamer Gaddafi vowed to march on the capital and topple him from power. "There is no going back. Even if we all die, at least children will not have to live with him," a Gaddafi opponent said in eastern Libya. "Our goal now is Tripoli," said another dissident at a meeting in the town of Al-Baida addressed by defecting generals from Gaddafi's increasingly fractured armed forces. "If Tripoli cannot liberate itself." The European Union said it was seeking naval back-up to rescue up to 6,000 trapped Europeans as thousands scrambled to escape what former colonial ruler Italy said was a "bloodbath" in the oil-rich north African state. Those managing to get out said Libya was "descending into hell" as European leaders braced for a coming tide of Libyan refugees across the Mediterranean sea. Another FT Syndication Service report by Abeer Allam, Heba Saleh, Jack Farchy and Javier Blas adds: King Abdullah of Saudi Arabia announced financial support measures, worth an estimated SR135bn ($36bn), in a bid to avert the kind of popular unrest that has toppled leaders across the region and is now closing in on Libya's Muammer Gaddafi. The measures include a 15 per cent salary rise for public employees to offset inflation, reprieves for imprisoned debtors, and financial aid for students and the unemployed. Saudi Arabia's ruling family has thus far been spared the type of popular discontent that has toppled presidents in Tunisia and Egypt and brought Libya to the brink of civil war, after cities in the country's eastern region rebelled against Col Gaddafi's rule. Oil prices surged as production in Libya, the world's 12th-largest exporter and a major supplier to Europe, slowed and exports all but ground to a halt. Industry executives estimated that at least half of Libya's output had been shut down. Saudi Arabia, the world's largest oil exporter, has more than enough spare production capacity to make up for any lost supply in Libya. However, analysts said that Saudi crude was of lower quality than Libya's, leading to the possibility of a run on high-grade oil. The announcement of the Saudi relief measures coincided with King Abdullah's return to the country after three months. He had been abroad for medical treatment. The cash-rich Saudi government has pledged to spend $400bn by the end of 2014 to improve education, infrastructure and healthcare. "The king is trying to create wider trickle-down of wealth in the shape of social welfare,'' said John Sfakianakis, chief economist at Banq Saudi Fransi. Critics said the sweeteners did not address the Saudi public's political aspirations. Protests, political parties and labour unions are banned in the conservative kingdom. "We want real change. This will be the only guarantee of security of the kingdom,'' said Hassan al-Mustafa, one of 40 Saudi rights activists and journalists who signed an open letter requesting an elected parliament, more rights for women and enhanced anti-corruption measures.