Crude oil prices increased sharply Wednesday on news that Yukos, the big Russian oil exporter, may be forced to stop production because of its ownership dispute with the Russian government.
Oil was up more than a dollar a barrel on news that some Russian oil exports to China were halted as Yukos had no cash to pay shippers. Yukos, embroiled in a legal fight with the Russian government, is a major exporter and, after Saudi Arabia, Russia is the world's biggest oil exporter.
John Person, an oil analyst at Infinity Brokerage in Chicago, expects prices will rise to $45 a barrel and stay there for a considerable period of time.
"We believe that OPEC nations are near capacity right now," he said. "And if we throw in Russia and Iraq's inability to boost production right now, we probably could see that $45 price in the near-term."
In London, an oil analyst speaking on background, said he doubts that the turmoil at Yukos will significantly curtail Russia's oil exports. He believes Moscow is aiming to break up Yukos but is equally determined to keep exports at current levels.
World demand for oil has been rising because of a global economic pickup, particularly in North America and East Asia. Global growth this year is at its highest level in 25 years. John Person in Chicago believes oil demand will remain high at least for the next six months.
"As demand has increased on a global scale for commodities, raw building prices, steel, building materials in China, the transportation for these commodities has increased the demand for fueling vessels shipping products," predicted Mr. Person. "So we're seeing demand from all facets, it's not just from Americans driving these big SUVs."
The International Monetary Fund predicted in April that the oil price would average $32 a barrel this year. Even at $40, that target has been exceeded by 25 percent. Analysts say it is an open question how high the oil price must go to tip the recovering global economy into recession. Signs of an oil-price-induced slowdown are already apparent in some places.