LAGOS—OIL prices have reached new highs with worries that financial turmoil at Russia’s largest oil company could add further pressures on the world price. Oil futures in New York surged to $43.85 a barrel, the highest level since the futures contract began trading in 1983. Brent crude for September was $40.02 a barrel on London’s International Petroleum Exchange, its highest since October 1990.
The gains come amid heightened concern over production from Russian oil giant Yukos, which is threatened by a huge tax bill. YUKOS has said the company could collapse by mid-August because of a freeze on its bank accounts and assets, adding that its rail shipments of oil, which make up a quarter of its total sales, could soon be affected.
Yukos, whose former chief executive, Mikhail Khodorkovsky, is on trial for tax evasion and fraud, pumps a fifth of Russian oil. Oil dealers have said any disruption to exports from Russia would stretch already tight global stockpiles and leave OPEC with little or no power to react.
OPEC, which has been trying to bring prices down for months, is pumping at more than 95 per cent of capacity, the highest for a quarter of a century, giving it little room for manoeuvre in an emergency.
Oil prices were already on the rise due to fears of terror attacks on Middle East oil infrastructure, sparking worries over inflation in energy consumer nations.
The Organisation of Petroleum Exporting Countries (OPEC) has also expressed concerns over the latest oil price increases that have seen the price of OPEC crude hit its highest level since the 1990 Iraqi invasion of Kuwait.
“(Price increases) are a reason to worry, seeing as there is more than enough oil on the market and our member countries are doing all in their power to calm market fears,” said Indonesia’s OPEC governor Maizar Rahman. Rahman, who is acting for Indonesian Energy Minister Purnomo Yusgiantoro as OPEC Secretary General, also warned that the 11 OPEC countries were currently operating at close to their production limits. OPEC output is currently at 29 million barrels per day, some 3.5 million barrels over the 25.5-million-barrel quota set in early June.
The reference basket price— the arithmetic average price for seven selected crudes — hit $37.5 per barrel on Wednesday, the OPEC Secretariat said, an increase of 68 cents on the previous day.
The crude price spike has been attributed to fears over production levels after Russian bailiffs reportedly slapped sales restrictions on the embattled oil giant Yukos as part of the ongoing effort to recover billions of roubles in unpaid taxes.
Russian Justice ministry officials, however, denied yesterday that any such sales ban was in place, and said Yukos, which produces roughly as much oil yearly as Kuwait, may still produce and sell oil.
Meanwhile, oil prices in New York fell slightly yesterday following a peak of $43.05 per barrel on the NYMEX futures’ market the day before. Wednesday’s closing price of $42.90 per barrel was the highest in the market’s 21-year history.
Prices eased to $42.60 per barrel on futures contracts for September delivery early Thursday, a drop of 30 cents or 0.7 per cent.
