Bailiffs order Yukos to stop sales; supplies strained, concerns mount over lack of spare capacity.
July 28, 2004: 6:22 AM EDT
LONDON (Reuters) - Oil prices pushed towards fresh 21-year highs Wednesday after bailiffs ordered beleaguered Russian oil giant Yukos to stop sales.
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The announcement threatened to place more strain on tight international supplies.
The news intensified concerns over the lack of spare capacity in the international oil system, as the OPEC cartel pumps at its highest level for a quarter of a century to meet strong global demand growth.
U.S. light crude for September delivery rose 24 cents to $42.08 a barrel, pulling back from a session peak of $42.20 that was just 25 cents below early June's 21-year high. London Brent crude was up 19 cents to $38.73 a barrel.
Prices jumped after a company source said bailiffs told Yukos' four production units, which together pump 1.7 million barrels a day of oil, to halt sales of property -- including oil.
It was not immediately clear whether the order would force Yukos to halt shipments of oil straight away or simply bar the company from signing any fresh supply contracts.
The decision is likely to hasten the collapse of the firm that pumps around 20 percent of Russian crude supply -- the world's second biggest oil exporter behind Saudi Arabia -- after five years of rapid production growth.
Yukos has repeatedly said it faces imminent bankruptcy as courts seek to enforce a $3.4 billion tax debt for 2000.
"This doesn't give Yukos long, because all of a sudden new cash flows stop coming in," said Stephen O'Sullivan, oil analyst at brokerage UFG. "It will bring matters to a head very quickly."
Yukos chief executive Steven Theede earlier Wednesday asked for access to its frozen bank accounts to avoid a production halt later this week.
Supplies stretched
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.
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.
Venezuela's oil minister said Tuesday the producers' cartel had little spare capacity to help lower high oil prices.
"A cut is not foreseen, and most of the countries are near their production limits," Rafael Ramirez told Reuters.
Traders are focused on Wednesday's weekly data on fuel stockpiles from the U.S. Energy Information Agency, with analysts polled by Reuters expecting crude stocks to have slipped by 900,000 barrels in the week ended July 23.
Gasoline stocks are expected to dip just 150,000 barrels, while distillates, which include heating oil, are seen rising by 600,000 barrels. The data is due out at 10:30 a.m. ET.
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