The Dow Jones Industrial Average will rally by 1,000 points if Libyan leader Moammar Gadhafi caves to pressure and steps down, says CNBC's Jim Cramer.

Until then, oil prices will keep climbing, possibly hitting 2008's peak of $147 a barrel, which will threaten economic growth rates as well as stock prices.

"Do not get too depressed, though, because the moment we get truly rid of Gadhafi, I could see the Dow rally as much as 1,000 points."

It's all happened before.

In 1990s, when then Iraqi leader Saddam Hussein invaded Kuwait, rumors swirled around the event, including those that Saddam was going to withdraw or was facing revolt, sending stocks on roller-coaster rides.

Those rumors proved to be wrong.

"The right move wasn't to buy these rumors but to sell," Cramer says.

Moammar Gadhafi

Today, the same thing will occur, and if Gadhafi does leave, oil will fall dramatically, sending investors racing to stocks.

"We're going to play this game endlessly, until Gadhafi leaves town."

So don't chase the rallies but don't jump out of the market altogether, Cramer says.

Fighting continues to rage in Libya as Gadhafi's warplanes bombard rebel strongholds.

Britain and France want the United Nation to impose a no-fly zone over Libya as the conflict displaces millions.

"Humanitarian organizations need urgent access now," says U.N. aid coordinator Valerie Amos, according to Reuters.

"People are injured and dying and need help immediately."