LONDON, 29 July 2004 — Oil prices hit their highest level in at least 21 years yesterday after bailiffs ordered beleaguered Russian oil giant Yukos to stop sales, threatening further strain on tight international supplies.
The news intensified concerns over the lack of spare capacity in the international oil system, as the OPEC pumps at its highest level for a quarter of a century to meet strong global demand growth.
Gains accelerated after a weekly US government report showed just a small build in crude stocks and a fall in gasoline inventories even though crude imports into the country were at the highest weekly level ever.
US light crude rose $1.21 to $43.05 a barrel — topping peaks hit in early June and the highest price since the New York Mercantile Exchange launched the contract in 1983. London Brent crude rose $1.14 a barrel to $39.68, its highest level since October 1990, ahead of the first Gulf War.
New York’s main oil contract soared to a record high closing level yesterday. Light sweet crude for delivery in September surged $1.06 to a record finish of $42.90.
Prices jumped after a company source said Russian bailiffs told Yukos’ four production units, which together pump 1.7 million barrels a day of oil, to halt sales of property — including oil. Yukos has said it faces imminent bankruptcy as courts seek to enforce a $3.4 billion tax debt for 2000.
It was not clear whether the order might force Yukos to halt shipments of oil or simply bar the company from signing new supply contracts. Oil brokers said Baltic and Black Sea loadings of Yukos crude were going ahead normally.
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 say.
