TRIPOLI, Mar 1 – Libyan leader Muammar Gaddafi insisted his people loved him but was slammed as "delusional" as the United States slapped a record-breaking $30 billion in sanctions on his brutal regime.
US and European leaders weighed the use of NATO air power to impose a no-fly zone over Libya and stop Gaddafi from using air strikes against his own people, as the strongman fights a bloody rearguard action against encroaching rebels.
Anger at authoritarian Arab regimes in the Middle East and North Africa raged from Algeria to Yemen and has spread to the previously unaffected Gulf states of Djibouti, Kuwait and Oman.
Interim regimes in Egypt and Tunisia felt renewed pressure from protesters impatient for real democratic change, while Iran denied reports that it had imprisoned key opposition leaders.
Fears grew over the humanitarian fallout after more than six weeks of turmoil as the United Nations stepped up warnings of a mass exodus from Libya. More than 100,000 people have already fled into Egypt and Tunisia.
The United States said it had blocked around $30 billion in Libyan assets, the largest amount ever frozen, while the European Union also imposed its toughest international sanctions yet on Gaddafi\’s crumbling regime.
Gaddafi was unrepentant, although his regime now controls only some western areas around the capital and a few long-time bastions in the arid south. Key oil fields in the east have fallen to the opposition.
"They love me all. They would die to protect me," he said in an interview with Western journalists in Tripoli on Monday, laughing off suggestions that he might leave Libya as the White House aired the prospect of exile for him.
US ambassador to the United Nations Susan Rice said the interview showed "how unfit he is to lead and how disconnected he is from reality".
"It sounds just frankly delusional, when he can talk and laugh to an American and (an) international journalist while he is slaughtering his own people," Rice said.
The United States moved naval and air forces into position around Libya. Britain said it was working with its allies on a military no-fly zone over Libya, while stressing the logistical and diplomatic difficulties.
Secretary of State Hillary Clinton denied that military action was imminent but said Gaddafi should quit power "now".
Forces loyal to Gaddafi on Monday attacked the town of Misrata, 150 kilometres east of Tripoli, and killed two people, a witness said. Rights groups say at least 1,000 people have now been killed in Libya.
In Geneva at the UN Human Rights Council, Clinton also said that backing peaceful political transitions was not just a matter of ideals but a "strategic imperative" for the West.
Egypt imposed a travel ban on Monday on its ousted president Hosni Mubarak, who resigned and retreated to his home in Sharm el-Sheikh on the Red Sea on February 11 following weeks of protests.
Fresh clashes erupted between Omani police and protesters, a day after police killed at least one as the regional turmoil reached the normally calm Gulf sultanate.
Bahrain\’s Crown Prince Salman said efforts were under way to launch talks with the opposition, which is demanding major political reforms amid a wave of anti-government protests.
Two ministers in Tunisia\’s interim government quit on Monday, a day after prime minister Mohammed Ghannouchi resigned following protests demanding the removal of figures from the toppled hardline regime.
Kuwait too has been affected, with a key opposition group on Monday demanding the ouster of the prime minister as youth activists called for a rally on March 8 to force him to quit.
In Djibouti, President Ismael Omar Guelleh, who is seeking a third term in April elections, accused the opposition on Monday of choosing the path of violence.
And in Iran, the websites of opposition leaders Mir Hossein Mousavi and Mehdi Karroubi said they and their wives had been arrested and put in a Tehran jail.
White House spokesman Jay Carney said the reported detentions were "unacceptable", but an Iranian judicial official denied the reports.
Foreign Minister Ali Akbar Salehi said in Geneva that events in Iran were being manipulated and there was "absolutely no comparison" to the popular uprisings in the Arab world.
The regional crisis drove world oil prices up to a two-year high last week, although Saudi Arabia\’s reassurances of adequate supply have calmed the markets somewhat.
In Asian trade Tuesday, Brent North Sea crude for April delivery gained 62 cents to $112.42 and New York\’s main contract was up 44 cents to $97.41.
Libya\’s opposition said it was resuming oil exports suspended during the unrest, and had loaded a tanker with one million barrels of crude for China.
Venezuelan President Hugo Chavez, one of Gaddafi\’s few remaining allies, again accused the United States of plotting to invade Libya with European connivance.
"What do they want? Libya\’s oil," he said.
But UN Secretary General Ban Ki-moon said Gaddafi had "lost legitimacy when he declared war on his people", adding his regime was meeting "the winds of change" sweeping across the region.