WASHINGTON (AP) -- The dramatic advance of Libyan rebels over the forces of longtime strongman Moammar Gadhafi offers vindication, at least for now, for President Barack Obama's decision to refrain from using U.S. troops on Libyan soil and to let NATO take the lead. But confusion Tuesday over the extent of rebel progress illustrated the uncertain path to stability and the hazards that still face the White House.

How Libya moves away from the current turmoil will present the next challenge for Obama and could determine how the public views not only his foreign policy, but in some measure the U.S. economy as well.

Underscoring the volatility, Gadhafi loyalists struck back at the rebels Tuesday. Questions over the state of play in the fight for the Libyan capital contributed to an uptick in oil prices, after a drop on Monday.

The news for Obama on Monday could not have been better. The Libyan street was euphoric, Gadhafi was in hiding and the price of oil - a contributor to dangerous economic lethargy - was dipping.

"The Libyan intervention demonstrates what the international community can achieve when we stand together as one," Obama said at his vacation retreat in Martha's Vineyard, Mass.

Obama was careful to emphasize that uncertainty remained and that Gadhafi's regime could still pose a threat.

It will take several months even under a stabilized Libya before its oil fields are producing enough crude to start exporting again. But any extra shipments could lower the price of gasoline, which has already come down more than 40 cents a gallon from its peak in May.

Back in March, Obama gambled that the way to confront a potential civilian catastrophe in Libya was to build a coalition of NATO and Arab countries to use airpower ostensibly to protect Libyan citizens from a Gadhafi crackdown. But his intent was clear all along: Gadhafi had to go.

The Libyan leader was deemed a sponsor of terrorism, and his regime in 1986 was found responsible for bombing a Berlin discotheque frequented by U.S. troops. Three people died in the explosion. Two years later, a Libyan agent planted a bomb that blew up Pan Am Flight 103 over Lockerbie, Scotland.

The uprising in Libya follows the death of Osama bin Laden at the hands of U.S. special operations troops, a major achievement for the Obama administration and one that solidified the president's standing with the public on his handling of terrorism.

But Gadhafi's removal has additional implications. A stabilized Libya would mean the country's oil production could go back online, potentially reducing the cost of oil, which spiked globally in February as the flow of oil from Libya dried to a trickle.

Time and again, the president has cited the uprisings in the Arab world and the increased cost of oil as "headwinds" that have imperiled the economic recovery.

Libya has the largest oil reserves in Africa. Before the uprising, it was the world's 12th largest exporter, delivering more than 1.5 million barrels per day mostly to European markets.

The news of the rebels' success was affecting Brent crude, which is used to price many international oil varieties, dropping 92 cents to $107.70 per barrel in London on Monday. It ticked up 29 cents to $108.65 on Tuesday amid confusion and continued fighting in the Libyan capital of Tripoli.

"If oil prices continue to head south, that's a real plus for the economy," said Mark Zandi, chief economist at Moody's Analytics. "We can take all the plusses we can get at this point."

So could Obama. While the president's overall approval with the public is above 40 percent in most polls, the number that approve of his handling of the economy dropped to a new low of 26 percent in a Gallup poll last week. By contrast, 53 percent approved of his handling of terrorism.

Still, the rebels' entry into Tripoli overshadowed two lingering questions: What's next, and could a more aggressive U.S. involvement have knocked Gadhafi from power much sooner?

In a statement issued late Sunday, Republican Sens. John McCain of Arizona and Lindsey Graham of South Carolina said they regretted that "this success was so long in coming due to the failure of the United States to employ the full weight of our airpower."

"Ultimately, our intervention in Libya will be judged a success or failure based not on the collapse of the Qaddafi regime, but on the political order that emerges in its place," the two senators said.

Texas Gov. Rick Perry, a candidate for the Republican presidential nomination, expressed a similar view.

"The lasting impact of events in Libya will depend on ensuring rebel factions form a unified, civil government that guarantees personal freedoms, and builds a new relationship with the West where we are allies instead of adversaries," he said.

Former Obama adviser Robert Gibbs, who is assisting the president's re-election campaign, said the achievement was already evident.

"The American people will see this as a success because we didn't need to send troops in, didn't lose American lives and it involved others in the world who also had big interests in Libya's stability taking a bigger role," Gibbs said.

But the administration remains aware that today's successes could turn sour. Obama called on the rebel leadership to work toward a transition that "is peaceful, inclusive and just."

"True justice will not come from reprisals and violence," Obama said. "It will come from reconciliation and a Libya that allows its citizens to determine their own destiny."

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