Oil near to highs despite Yukos move

Oil prices held near record highs yesterday,, despite Russia lifting a threat to stop energy firm Yukos pumping and selling oil. Despite the move , worries lingered over Russian oil production and crude prices only fell back marginally.

US light crude settled down just 15 cents to $42.75 a barrel in late trading within reach of the a peak of $43.05 hit on Wednesday, the highest in the contracts 21-year history. In London, Brent crude oil fell 28 cents to $39.25 after scaling a 14-year high of $39.68 the day before.

Wednesdays price peaks were driven by a warning from Yukos that an asset freeze ordered by bailiffs could hit oil sales by its operating companies.

Yukos produces around 1.7 million barrels per day, almost as much as Iraq.

Court bailiffs had threatened to freeze all sales of crude by Yukos as they try to reclaim at least $3.7 billion (€3 billion) in unpaid taxes from Russia's biggest oil firm, which is under legal attack along with its founder, billionaire "oligarch" Mr Mikhail Khodorkovsky.

"The decision of the Ministry of Justice to revoke its previous orders...is welcomed by Yukos," said the company's chief executive officer, Mr Steven Theede.

"In a larger sense, we continue to work toward a satisfactory resolution of the tax issues and remain hopeful that one can be achieved."

Yukos said on Wednesday that it could not stop oil entering pipelines without halting production entirely, prompting fears of the imminent collapse of a company that pumps two per cent of world crude.

But Yukos executives say severe disruption is still a danger for as long as a legal bar preventing it selling fixed assets to raise cash remains in force.

That ban could stop the firm paying bills for transport of oil through pipelines and by rail, leaving it unable to fulfil existing delivery contracts.

Bailiffs have already seized more than $500 million in cash from Yukos and are planning to sell the main operating unit of a firm which pumps more oil than Libya.

That would cripple a company that was seen as Russia's most efficient and transparent until prosecutors moved in last year, in what critics call revenge for Mr Khodorkovsky's daring to oppose Mr Putin.