First it was Tunisia, and then Egypt that ran off its dictatorial presidents as protestors demanded change.

Well, the success that the protestors have had there is now energizing crowds in Yemen, Djibouti, Iran, Bahrain and especially Libya where the uprising is now becoming the most heated.

Last night, Moammar Gadhafi’s son went on local TV and threatened “rivers of blood will flow” as he deployed security forces to return things to normal “no matter what the price."

(By the way, the number of dead now totals over 250 people.)

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Then he went on to say that, “Instead of weeping over 84 dead people, we will weep over hundreds of thousands of dead.”

He actually went on to warn that it could drive oil companies away. Sure enough, Royal Dutch Shell and Statoil both closed their offices and evacuated expatriate workers.

So while at the initial signs it looks like they are flexing their muscles … they are also losing some of their strength at the same time.

For instance, two war planes fled the country for Malta yesterday. There have also been reports of some of the military switching sides and actually helping to protect these unarmed protestors.

Then Libya’s representative to the Arab League quit his post and sided with the protestors. Next, Libya’s ambassadors to China, India, the U.K., Indonesia, Bangladesh and Poland all resigned too.

So this place is getting more chaotic by the moment.

What will the outcome be? Well, most likely Gadhafi’s regime is going to come to an end.

But what I can tell you is that all of this unrest ends up being good for higher oil prices as outages and supply interruptions are feared. It will also be good for the U.S. dollar as investors tend to run to the defense of the world’s reserve currency during these times of upheaval.

The price of oil shot up $6.75 a barrel upon the news and the dollar gained broadly against almost every major currency after the news of the Libya uprisings worsening.

Where oil and the dollar could see an even bigger boost is if the uprisings spread to Saudi Arabia. That’s the one that the whole world is watching out for.

Yeah, there’s oil in Libya and Bahrain … but if all of this continues to spread and goes into Saudi Arabia … that’s when it’s really going to get ugly and for sure affect the world on a major level if Saudi oil supplies were to be interrupted.

So in the end, those that are invested in oil benefit from all of this. The dollar will get a boost from all of this as long as it lasts (and then will go back into its long-term decline once all of this finally blows over).

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Money Matrix Insider. Discover more by Clicking Here Now.