End of the line for Yukos

Yukos warned yesterday that it is no longer able to pay staff wages and that oil production could stop any day.

The latest problems to beset Russia's biggest oil company sent the price of crude racing ahead again on the global markets.

Yukos said prosecutors wanted to seize 76bn roubles ($2.6bn) from the accounts of Yukos subsidiaries as part of the process of resolving a larger tax bill for 2000.

This follows a Moscow district court case on Tuesday during which prosecutors accused Yukos accountant Irena Golub of concealing funds "acquired by criminal means" on the accounts of Yukos subsidiaries.

Yukos said the court action was paralysing company operations "because it makes it impossible for its subsidiaries not only to pay suppliers, vendors and contractors, but also to pay wages to its employees".

The trouble further unnerved jumpy crude markets, sending the price of Nymex October oil up by 60 cents to $44.60 a barrel. At one point on Wednesday the price of oil jumped by $2 after United States government data unexpectedly showed that crude stocks fell last week. "The Yukos factor is helping to push prices higher," an industry expert in New York confirmed.

The dispute over tax at the Russian oil group is seen by some as part of a campaign by the Kremlin to undermine Yukos and its jailed founder, Mikhail Khodorkovsky, for dabbling in politics. But the Russian public supports efforts to crack down on the oligarchs they believe became wealthy at their country's expense.

HERE