Crude Oil Rises to Record After Yukos Says It May Cut Output

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http://quote.bloomberg.com/apps/news?pid=10000006&sid=axygUFnIGccU&refer=home

July 28 (Bloomberg) -- Crude oil futures rose to a record on concern OAO Yukos Oil Co., Russia's biggest oil exporter, may cut production as a tax dispute with the government intensifies.

Yukos said the government ordered a halt to production from its main Siberian unit as court bailiffs seek to recover $3.4 billion in back taxes and fines. Surging economies have spurred record demand growth, straining supplies as members of the Organization of Petroleum Exporting Countries pump close to their capacity.

``This is detrimental to the long-term supply outlook,'' said Kyle Cooper, an analyst with Citigroup Inc. in Houston. ``It will become much harder to attract foreign investment in the Russian oil industry. Any investor in the future will demand much higher returns to make such a risky venture.''

Crude oil for September delivery was up 66 cents, or 1.6 percent, at $42.50 a barrel at 10:07 a.m. on the New York Mercantile Exchange, the highest price since futures began trading in 1983. On June 2 prices reached $42.45, the previous record.

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1. So I guess Bandar's promise to Bush isn't working out so well.