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Oil prices hit fresh record highs

Organization of Petroleum Exporting Countries (OPEC)
Oil and Gas

LONDON, England -- Oil prices have hit new highs in New York and London following reports that Russian oil giant Yukos would not be allowed to use frozen funds to pay for operations.

The news that Moscow had overturned an earlier decision to unfreeze Yukos assets renewed fears that exports could be affected.

In New York, light crude futures hit $44.73 in after-hours trading Thursday night. The previous record was set Wednesday when light crude shot to $44.34 at one point.

In London Thursday, Brent crude futures pushed through the $41 a barrel level for the first time to a fresh record of $41.22 -- beating the previous high of $40.99 set Wednesday.

Earlier Thursday, Russia's Justice Ministry revoked permission for Yukos to use its bank accounts to finance daily operations and pay transport fees, news agencies reported. (Full story)

On Wednesday, oil prices pulled back from record 21-year highs after Yukos said it had received permission from the ministry's bailiffs service to use the accounts for operational costs.

Wednesday's $1.32 fall in the U.S. benchmark also came as the Organization of Petroleum Exporting Countries (OPEC) reassured the market that it has 1 million to 1.5 million barrels of spare daily production to add to supplies if needed.

That was a reversal from Tuesday's warning from OPEC President Purnomo Yusgiantoro, Indonesia's oil minister, from that supplies were scarce.

Oil prices have been on the rise since late July, primarily fueled by fears over Yukos as well as the reliability of supplies from Iraq.

U.S. terror concerns also played a role after Washington heightened the alert for New York, New Jersey and Washington.

Perennial labor unrest in Nigeria and an upcoming presidential recall election in Venezuela are sparking concerns about oil production in those countries as well.

Oil prices have risen sharply since the early 2002 level of about $20 a barrel. But after adjusting for inflation, they are still well below the levels reached in the "oil shock" of the early 1980s.

According to the U.S. Department of Energy, the average price of oil in 1981 was $31.77 a barrel, or about $60 in 2004 dollars. The February 1981 peak price of $39.00 equals about $73.50 today.

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