Crude oil futures today surged above $46 a barrel in New York after Yukos, the Russian oil major, suspended some of its crude exports to China because of its financial difficulties.
Yukos’s board temporarily suspended shipments of crude oil to China by rail, which are usually 100,000 barrels per day (bpd), because of problems in paying export duties and railway fees, a spokesman said.
US light crude was up 44 cents at $46.03 a barrel in early trade in New York after hitting $46.35. In London, Brent crude today rose 25 cents to $42.70 a barrel. Last month the cost of crude rose within striking distance of $50 a barrel.
Today’s gains followed a 4 per cent rise in oil prices on Friday as traders assessed the disruptions to supply after Hurricane Ivan hit the Gulf of Mexico.
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Barclays Capital oil analyst Orrin Middleton said any signs of the stand-off between Russian authorities and Yukos starting to worsen would lead the market to over-react.
Earlier this month, the International Energy Agency noted that despite the concern over Yukos’s fate, Russia was pumping considerably more oil this year than last. The organisation suggested that market “chatter” - and not a fundamental shortage of oil - was responsible for ramping up prices.
Yukos, which produces around 2 per cent of the world’s oil, has repeatedly said that it might have to cut production and exports after bailiffs froze its bank accounts as part of a campaign to recover more than $7 billion (£4 billion) in back taxes from the company for 2000-01.
The threat of disruption to one of Russia’s largest exporters, which sends about 1 million bpd to Western markets and China, has been pushing up oil prices for the past two months.
“Yukos’s transport expenses and customs payments total $150 to $170 per tonne. The company currently has limited access to its accounts and cannot bear such expenses,” the spokesman said.
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“Yukos will resume its exports to China fully the moment it regains access to its accounts, frozen by the Justice Ministry. We hope that the Russian Government correctly understands the great importance of Russian oil exports to the world market and will take measures to ensure uninterrupted supplies of oil to our Chinese partners.”
The stopping of rail exports to China is especially damaging to the Kremlin because Russia supplies oil to China — one of its key future markets — under an inter-governmental agreement and Yukos provides almost all of it.
Wen Jiabao, China’s Prime Minister, is to visit Moscow this week for talks with his Russian counterpart, Mikhail Fradkov, on economic co-operation, especially in energy.
China’s ambassador to Russia, Liu Guchang, this week expressed hope that Russia would stick to a plan to increase oil exports to China rapidly during the next few years. He said:
“Changes in the situation surrounding Yukos are not affecting Russian oil supplies to the Chinese market.”
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Last month China issued a rare statement of concern, along with the US, about the effect the Yukos saga was having on world oil prices.