THE REAGAN administration was quite right

to ask the American oil companies to pull out of Libya, and long American tradition endorses that decision. There has been some grumbling here and there that boycotts and economic sanctions are always ineffectual. No doubt that's true, but Mr. Reagan is not endeavoring to establish a worldwide boycott of Libyan oil. He is not threatening to try to cut off Libyan oil revenues completely. Instead, he is offering a political judgment and condemnation. He is saying that, since Libya uses its oil wealth to support a sustained and highly professional campaign of assassination and terror, companies that operate under the American flag have a moral obligation not to contribute to the Libyan treasury.

Libyan revenues probably won't suffer much, since Libya can go to Europe for technicians to run the fields and customers to take the oil. Wisely, Mr. Reagan has chosen not to try to press the Europeans into joining this gesture of condemnation. There are much larger issues to be worked out among Americans and Europeans, most of them concerning weapons and the Atlantic Alliance. But it is worth at least noting in passing that the Europeans' troubles with the Qaddafi regime are largely the result of their own complaisance. Col. Qaddafi's hit squads have been roaming around Western Europe for several years murdering the colonel's alleged enemies with very little interference, or even comment, from the governments there. In the past few days, at the NATO meetings in Brussels, the Germans and the French have been telling the United States that it really ought to make an effort to be more friendly to Col. Qaddafi.

When pressed on the matter, Europeans usually wring their hands and explain that, in contrast to the fortunate Americans, they are desperately dependent on North African oil. At the moment, of course, that's nonsense. Because the sellers have shot their prices up too high, there are vast amounts of oil for sale throughout the world. One African democracy alone, Nigeria, could replace Libya's entire current production overnight.

Europe seems to accept the occasional Libyan outrages as the necessary price of not doing anything about them. Most Americans would probably be inclined to a different response. For the present it is necessary to suspend judgment on the strange reports of assassins moving toward American officials. But the evidence of Col. Qaddafi's murderous pursuit of dissident Libyans in other countries is beyond dispute. Mr. Reagan has now properly withdrawn American support from the business that pays the Libyan gunmen's bills.