Libyan dictator Muammar Gadhafi is refusing to step down, continuing a violent crackdown on demonstrators rallying in the streets.
President Obama, in a forceful statement, said late Wednesday that his administration is preparing 'full range' of options in response to violence.
Gadhafi insists foreigners were behind the threat to his regime, and urged his followers to "go after the rats."
He also appeared on national television Tuesday night, vowing to fight till "the last drop of blood" and "die a martyr in the end."
"I am a warrior; I am a fighter, a revolutionary from tents," Gadhafi said. "I am not going to leave this land." he said.
The volatile leader claimed he hasn't ordered the use of force on fellow Libyans. But activists in the country say otherwise.
"Listen to that (gun shots)," one resident said. "This is heavy weaponry. I'm talking about heavy artillery."
The regime has closed the borders, shut down Internet access, and cut off phone lines, making it difficult to confirm reports that the Libyan Air Force fired on unarmed demonstrators.
At least one post on the social networking site Facebook claimed people were dying.
"A woman went looking out of the balcony of her house. They shot her to death," the Facebook user wrote. "These are not humans, these are gorillas!"
Other witnesses described scenes of butchery -- many at the hands of African mercenaries hired by Gadhafi.
Refugees are flooding to the Egyptian border to escape the carnage.
Gadhafi is trying for a stranglehold on the capital of Tripoli, but the opposition is prevailing in eastern Libyan cities like Tobruk.
"Gadhafi, go away. We don't want you," one protestor yelled. "Neither you or your family or your tribe. Nothing!"
The U.S. State Department has started evacuating Americans from Libya, in advance of what could become a civil war.
"It was kind of chaotic at the airport. But other than that we got through," American evacuee Dede Blackburn recalled. "We're just thankful to be here."
A growing number of analysts believe Gadhafi won't survive the threat to his 42-year rule -- but he won't go quietly.
Without a united military, what comes after Gadhafi's leadership could be chaotic and bloody.
"The risk there is, as the regime disintegrates and falls, that the country perhaps disintegrates and falls into different regions and tribal groups," explained Paul Salem, director of the Carnegie Middle East Center in Beirut.
With the future of Libyan oil production uncertain, prices took the biggest one-day jump in three years, Tuesday, sending the cost of a barrel near $100. Fears of another world recession are also stirring among investors.
"What you can see from Libya and what you've seen over the past week is a knock-on effect within the Middle East," said Charles Stanley investment director Elissa Bayer. "That is very much a matter of concern, and perhaps more so if it goes to, say, Saudi Arabia or Iraq because the 'what-might-happen' scenario is really quite unsettling."