Warning by Yukos drives oil prices up
World oil prices rose on Thursday after Russia's largest oil producer, Yukos, said a court ruling "paralyzes" the company's operations.
Futures prices of crude oil jumped more than US$1 on the New York Mercantile Exchange after the Yukos announcement and reports of an attack on Iraq's northern oil export pipeline renewed fears of disruptions at a time when world oil supply is tight.
On Wednesday, crude oil prices surged by nearly US$2 a barrel after the US Energy Department reported that oil inventories shank more than expected last week. The report raised the specter of possible energy shortages in the run-up to the peak winter season.
But the rally ended late Thursday, and oil for October delivery settled at US$44.06 a barrel in New York trading, up just US$0.06 for the day. Oil prices have risen more than 30 percent so far this year.
The announcement by Yukos on Thursday is the latest move in a dispute between the Kremlin and the company over claims of billions of dollars in back taxes.
Yukos, which produces 2 percent of the world's oil supply, said it might be forced to halt production after a Moscow court on Tuesday issued an order authorizing prosecutors to seize the bank accounts of the company's main production unit and refinery.
Yukos said that if a freeze on the unit's accounts remained in place, the company would be unable to pay wages and settle accounts with equipment suppliers and trading partners.
"The freeze now means that the bank accounts of all our subsidiaries have been blocked," Yukos wrote in an e-mailed statement. Yukos no longer has the ability "to conduct any transactions, including payment of salaries and taxes and for current operations," it said.
"The seizure of accounts paralyzes Yukos' production activities as it does not allow the company to pay not only its suppliers and subcontractors, but also wages to the personnel," the Yukos statement said.
The Russian Tax Ministry described Yukos' claims as "an attempt to mislead the public."
"Yukos' statement is pure stupidity," the ministry said in a statement late Thursday. "It is an attempt to mislead the public. The seizure of accounts has nothing to do with wages paid to Yukos' workers. Nor is it hampering settlements with suppliers or contractors."
Yukos also warned on Thursday that without access to its bank accounts, employees and customers across Russia could suffer.
"Fuel delivery in more than 40 regions of the Russian Federation will be threatened" and a halt on wages could trigger social unrest among people who relied on the company for their livelihoods, Yukos said.