Oil Storms Higher on Supply Worries

OPEC warns it can't get production raised fast enough to ease existing pressure.
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Updated from 9:39 a.m. EDT

Crude oil stormed to another record high Tuesday after OPEC warned it can't increase capacity enough to ease near-term supply constrictions amid a backdrop of lingering terrorism jitters.

Nymex crude for September delivery settled at $44.15, up 33 cents, while London Brent North Sea was up 52 cents a share to $39.90.

Nymex crude had reached as high as $44.22 a barrel during Tuesday's session.

Early Tuesday, the president of OPEC, Purnomo Yusgiantoro, warned that the cartel couldn't immediately increase output from current levels, which are already the highest in over 25 years.

Saudi Arabia, the world's largest oil exporter, "can increase production, but it cannot do it immediately," Yusgiantoro said. The country had previously assured the market that it intended to ramp up production by the first of August.

In the meantime, there was more bad news for Yukos as Russian tax authorities announced they planned to expand their accounting investigation to the company's 2002 financials. Yukos has already been found to owe back taxes of roughly $3.4 billion from 2000 and authorities say that it owes the same amount for 2001.

Although Yukos' three most important producing companies are slowly raising output, another year of tax debt matching their current load could cripple the struggling company.

On a related note, a Moscow court ruled Tuesday that the company would not have to pay a fine of $223 million for failing to pay its tax debt from 2000 by the Aug. 9 deadline.