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Markets & Stocks

Oil at new record, nears $47 a barrel
Continuing concerns about Yukos exports and sabotage against Iraqi facilities drive prices higher.
August 17, 2004: 4:16 PM EDT

NEW YORK (CNN/Money) - Oil prices erased an early dip Tuesday and settled at another record high amid continuing concerns about Russian exports and sabotage in Iraq.

U.S. light crude for September delivery jumped as high as $46.90 a barrel, but later backed off a bit to settle at $46.75, up 70 cents, on the New York Mercantile Exchange. The intraday record for the contract, hit during electronic trading Monday, is $46.91.

The September contract's previous record closing high was $46.58 reached Friday.

Russia's embattled energy company Yukos lost an appeal Tuesday to pay its $3.4 billion tax bill with shares it owns in oil company Sibneft, Reuters reported, citing Russian news agencies. Yukos still holds 20 percent of Sibneft after their failed merger last year and has offered to use Sibneft shares to pay off the tax claim.

"Any flip-flop on Yukos will move prices," said Phil Flynn, energy analyst with Alaron Trading. "This points to the government actively pursuing a bankruptcy against Yukos."

The Russian government's demand for billions of dollars in back taxes from Yukos has raised concerns about exports from the oil-rich country over the past several months, and prices have moved in step with the latest rulings on the situation from the Russian courts.

In addition, concerns that Iraq may scale back its pipeline capacity amid sabotage threats added to Tuesday's gains.

"We reckon there's at least $10 in the oil price for political uncertainty," said Medhi Varzi, senior energy consultant at Dresdner Kleinwort Wasserstein. "One day it's one country, another day it's another."

In real terms, adjusted for inflation, oil prices are still well below 1980's peak of $80 a barrel, following the Iranian revolution. But average U.S. prices this year so far of $38 are approaching those of 1974, the first oil shock, when crude averaged an inflation-adjusted $43 during the Arab oil embargo.

Although oil prices have been rising, gasoline prices dropped last week, but some experts say prices at the pump will soon follow crude's upward move.  Top of page

--Reuters contributed to this report

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