All trading involves risk. Losses can exceed deposits.

Oil spikes over Libya worries

The price of Brent crude oil is above the $110 mark after the Libyan prime minister was captured and then released after a few hours.

All trading involves risk. Losses can exceed deposits.

Brent crude oil is up nearly 2% as traders fear that political uncertainty in Libya could lead to supply issues. Prime minister Ali Zeidan was captured and held for several hours by militants before being freed.

Libya produces 700,000 barrels of oil per day, but output slumped during the civil war in 2011, and traders are worried today’s kidnapping could lead to further political uncertainty in the country.

North Africa and the Middle East are big oil producing regions and conflict often sees the price edge higher as traders tend to fear the worst.

Oil is also benefiting from the Janet Yellen effect, after US president Barack Obama nominated Ms Yellen for the top job at the Federal Reserve. Ms Yellen, who should being her new role early next year, is known for her dovish views, so she is likely to keep the US stimulus package in place which should boost the price of oil.

Daily Brent Crude (Dec) (10 Oct 13) chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.