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Oil prices hit record highs again

Yukos has been have given a month to pay off its $3.4 billion tax debt.
Oil and Gas

LONDON, England -- Oil prices have hit record highs on concerns over supplies from Russia and doubts about whether OPEC could fill any gap in production.

U.S. light crude reached $43.18 a barrel Friday, the highest level in the 21-year history of the futures contract.

In London, Brent crude for September delivery was up 50 cents at $39.75 a barrel -- the highest level since the 1990 Gulf War.

Prices began soaring Wednesday after news that Russian oil giant Yukos might face a ban on oil sales while courts try to enforce a multi-billion-dollar tax debt.

On Thursday, prices eased slightly after Russia's justice ministry allowed Yukos to keep pumping crude and reports Friday that Russian bailiffs have given the company a month to pay off its $3.4 billion tax debt. (Full story)

Still, markets remain on edge over Yukos' fate.

"The company is still clearly financially strapped by the government's insistence that it pay its $3.4 billion tax bill and pay it now," Timothy Evans, analyst at IFR Energy Services, said in a research note.

Evans said the market was skeptical of Iraq's claim that it was producing a total of 2.4 million bpd.

"But with the ongoing violence there, the suspicion is that it (total output) could be 1.4 million bpd tomorrow, forget about 2.8 million bpd by year-end," he said.

David Thurtell, a commodity strategist at Commonwealth Bank of Australia, told Reuters: "The Yukos tax row has made buyers of Russian crude afraid to buy from Yukos."

Meanwhile, analysts say the Organization of Petroleum Exporting Countries has little room to increase production in the event of a shortfall in global supplies.

OPEC is already pumping at more than 95 percent of capacity, the highest for a quarter of a century, analysts say.

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