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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.