Here is a good article on how Europe and the US could influence what’s happening in Libya:
There are numerous steps the United States and its allies can take today to affect the immediate calculations of the Qaddafi regime. Europe buys 85 percent of Libya’s oil, after all. And the West largely controls the international financial system through which the Libyan leadership moves its money — and could block transactions with one word from the Treasury Department or other finance ministries. And there’s more: Western governments could say today that they will seek international investigations and prosecutions of Libyan officials who murder their people. And they could offer to provide humanitarian assistance to parts of Libya that have fallen to the opposition.
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We should be under no illusion that Qaddafi himself will give in to international pressure at this point. As his brutal tactics show, he is fighting for his life. But Libya’s fate is not in Qaddafi’s hands; it is in the hands of those who must decide, today and tomorrow, whether to follow his orders. Every psychological blow to Qaddafi’s government — whether it is a Libyan official who defects to the opposition or a forceful repudiation of his government by the international community — gives them another reason to refuse to commit further outrages on their leader’s behalf, for which they may be held accountable when the crisis is over.
ETA: The International Crisis Group also has some suggestions.