Oil prices rebounded to record highs yesterday after the Russian government barred oil giant Yukos from access to its bank accounts, threatening its ability to continue exports.
US crude jumped to a high of $44.50 (€36.88) a barrel, the highest level in the 21 years of US oil futures trading, before settling at $44.41, up $1.58.
London Brent futures rose to $41.30 - another record high - before easing to $41.10.
Yesterday's jump wiped out a fall on Wednesday that came after Yukos, the world's number two exporter, said it would be free to use its bank accounts to keep exports flowing. "The chaos of the market has once again worked to the bull's advantage," Mr Timothy Evans, an analyst at IFR Energy Services, said.
Oil has been volatile this week on Yukos and on concerns about spare OPEC supply that were cooled only on Wednesday when cartel president Mr Purnomo Yusgiantoro said the group could immediately tap into 1-1.5 million barrels per day (bpd) of spare production.
Permission granted by one bailiff to Yukos on Wednesday was withdrawn after Russia's justice ministry said it was illegal. The company, which pumps 1.7 million bpd, or 2 per cent of world supplies, has been battling bankruptcy, with tax debts of $3.4 billion.
The new ruling means the company may not be able to use its cash to fund production and exports.
"The main news, of course, is Yukos against a backdrop of general market worries," said independent energy analyst Mr Geoff Pyne.
"The market thinks it is going to lose Yukos production and at the same time there is no sign that demand growth is slowing down in the second quarter as expected.
"There is enough news around to make people believe that OPEC will not be able to raise production immediately," he said.
Fears have grown that a major glitch could arise in the supply chain, just when energy demand is growing at the fastest pace in more than two decades and Asian economies continue to consume more oil. OPEC production is already running near the highest level since 1979.
Security concerns in Saudi Arabia and Iraq, as well as uncertainty in Venezuela and Nigeria, have sparked fears of inadequate supply.
"It will take a lot of time for this extra oil to be delivered by OPEC," said one analyst.
Former Saudi oil minister Sheikh Ahmed Zaki Yamani predicted that the price scare would not last.
"Prices are already too high. There is additional supply available from OPEC - you will definitely see it . . . Before the end of the summer we will see a lower price," he said. "Saudi Arabia has the key to do this."
Mr Pyne said there were a few signals that stocks were starting to build in the United States.
One of the triggers for Wednesday's fall was a report showing rises in gasoline inventories in the United States, unexpected as the country is still in the midst of the summer driving season.
