Oil at 21-Year High as Russian Oil Giant is Told to Stop Sales
LONDON -- Oil prices hit a 21-year high Wednesday after bailiffs ordered beleaguered Russian oil giant Yukos to stop sales, threatening further strain on tight international supplies, reported Reuters.
The news intensified concerns over the lack of spare capacity in the international oil system, as OPEC pumps at its highest level in 25 years to meet strong global demand growth.
U.S. light crude rose 66 cents to a new high of $42.50 per barrel -- just above peaks hit in early June and the highest price since the New York Mercantile Exchange launched the contract in 1983. London Brent crude rose 53 cents to $39.07 per barrel.
Prices jumped after a company source said Russian bailiffs told Yukos's four production units, which together pump 1.7 million barrels a day of oil, to halt sales of property -- including oil. Yukos, which produces more oil than OPEC member Libya, said it had not complied with the order and was continuing to operate while it sought clarification of what CEO Steven Theede called a "misinterpretation."
Yukos has said it faces imminent bankruptcy as courts seek to enforce a $3.4 billion tax debt for 2000.
A halt to sales would hasten the collapse of Yukos, which pumps approximately 20 percent of Russian crude supply. Russia is the world's second-biggest oil exporter behind Saudi Arabia after five years of rapid production growth.
If the Yukos turmoil prevents Russian production from meeting forecasts for further growth, the global oil supply system will be even more pressed to meet rising demand, analysts said.
OPEC has already jacked up production to 30 million barrels per day -- the highest level since 1979 -- to meet breakneck consumption growth in China and the United States. Saudi Arabia has led the supply increase, eager to stop prices rising to a level that would hurt world economic growth and stunt fuel demand.
The news intensified concerns over the lack of spare capacity in the international oil system, as OPEC pumps at its highest level in 25 years to meet strong global demand growth.
U.S. light crude rose 66 cents to a new high of $42.50 per barrel -- just above peaks hit in early June and the highest price since the New York Mercantile Exchange launched the contract in 1983. London Brent crude rose 53 cents to $39.07 per barrel.
Prices jumped after a company source said Russian bailiffs told Yukos's four production units, which together pump 1.7 million barrels a day of oil, to halt sales of property -- including oil. Yukos, which produces more oil than OPEC member Libya, said it had not complied with the order and was continuing to operate while it sought clarification of what CEO Steven Theede called a "misinterpretation."
Yukos has said it faces imminent bankruptcy as courts seek to enforce a $3.4 billion tax debt for 2000.
A halt to sales would hasten the collapse of Yukos, which pumps approximately 20 percent of Russian crude supply. Russia is the world's second-biggest oil exporter behind Saudi Arabia after five years of rapid production growth.
If the Yukos turmoil prevents Russian production from meeting forecasts for further growth, the global oil supply system will be even more pressed to meet rising demand, analysts said.
OPEC has already jacked up production to 30 million barrels per day -- the highest level since 1979 -- to meet breakneck consumption growth in China and the United States. Saudi Arabia has led the supply increase, eager to stop prices rising to a level that would hurt world economic growth and stunt fuel demand.