LONDON, July 28: Oil prices soared to the highest level for almost 14 years here on Wednesday as traders fretted over a financial crisis at Russian oil giant Yukos.

The price of Brent North Sea crude oil for September delivery surged to as high as 39.60 dollars a barrel, the highest level since October 1990.

It later eased back somewhat to 39.35 dollars, up 81 cents from the previous close. In New York, the price of light sweet crude for delivery in September shot up 1.21 dollars to an all-time high of 43.05 dollars a barrel in early trading.

Traders took fright at a warning from Yukos that it could halt production within days, after court bailiffs ordered its subsidiaries to stop all operations that would affect the state of their assets.

"What pushed things up is the Yukos story about the bailiffs going in," said Barclays Capital analyst Kevin Norrish. "Obviously it has raised concerns about potential disruptions to supply.

People are very nervous about that at the moment because of the lack of spare capacity, the low stock levels and the very strong demand. It is a very tight market, and that's why it has moved up."

Yukos subsidiaries "will in effect be forced to stop production and delivery of oil since they have been forbidden to sell any and all property - which means carry out production deliveries," the Interfax news agency quoted a letter from company management as saying.

Bailiffs moved against Russia's largest oil producer three weeks ago after it failed to pay $3.4 billion (2.8 billion euros) in back taxes for 2000. Yukos says it cannot pay the claim because courts have frozen its accounts and assets.

Meanwhile, the new chief of the troubled Yukos oil company said that authorities had promised to decide within two days whether to unfreeze some of the company's assets to keep the oil giant afloat in the short term.

"I have been personally told by the justice ministry that the decision will be made either Wednesday or Thursday," Steven Theede told a small group of Western reporters while on a business trip to Siberia. However, Theede admitted that so far he had received no signal from authorities that a positive decision would be reached. "Nothing has changed in terms of any kind of alternative ways of satisfying the 2000 tax bill," he said.

According to Theede, company employees had been paid through the end of the month, but rail shipments of oil to China could cease as early as the end of next week.

Yukos delivers some eight million tons of oil to China a year, but these could soon be interrupted because the rail ministry has been demanding a tariff payment the company cannot match since its assets are frozen.

"The rail shipments will be the first ones (to be affected), not the oil pipeline ones," Theede assured. Yukos and its major shareholders have been under investigation for a year in a case that many say is Kremlin payback for the political ambitions of its billionaire founder, Mikhail Khodorkovsky, who financed opposition parties and openly criticized President Vladimir Putin's government. Yukos shares, which have steadily slid since Khodorkovsky's arrest last October, plunged further after the announcement. AFP