US oil prices hit new record highs today because of the possibility of disruption to Russian oil supplies and because of doubt over OPEC's ability to make up any shortfall.
This morning, US light crude reached $43.34 a barrel, the highest in its 21-year history on the New York Mercantile Exchange, but is now trading at $43.18. In London, Brent crude reached heights not seen since the Gulf War, peaking at $39.90, before falling back to $39.68.
The most recent price hikes began on Wednesday, when it seemed that Russian oil giant YUKOS might face a ban on oil sales while courts try to enforce a multi-billion-dollar tax debt. Prices fell on Thursday after the Russian justice ministry allowed YUKOS to keep pumping.
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 be affected soon.
The company, whose former CEO Mikhail Khodorkovsky is on trial for tax evasion and fraud, supplies a fifth of Russian oil.
OPEC is pumping at more than 95% of capacity, the highest for a quarter of a century, giving it little room for manoeuvre in an emergency.
Traders are also wary of disruptions to Iraqi oil flows, after repeated disruptions in recent months, due to attacks on Iraqi pipelines. Even short-term outages this summer in major producers Norway and Nigeria have bolstered price strength, as traders fear OPEC could be unable to compensate for even minor hiccups as oil demand grows at its fastest in more than two decades.
