STORM damage to key US oil installations and supply disruptions in Russia sent oil prices spiralling beyond the $46 mark yesterday.

The cost of light crude bounced to $46.35 a barrel in New York on news that Russia's largest producer, Yukos, had scaled back exports to China.

This followed a four per cent rise in oil prices on Friday as traders assessed the disruptions to supply after Hurricane Ivan tore through the Gulf of Mexico.

Barclays Capital oil analyst Orrin Middleton said any signs of the stand-off between Russian authorities and Yukos starting to worsen would lead the market to over-react. Yukos, which produces two per cent of the world's oil, is in dispute with the Putin administration over a tax bill of $3.4bn.

Russian courts last week rejected an appeal by Yukos against freezing assets at 24 of its units.

This forced the company to review its cash situation and it announced yesterday that it was suspending some of its exports to China - about 100,000 barrels a day.

Mr Middleton said traders were also nervous about new storms gathering off the US coast, which meant prices were unlikely to ease back significantly.

Tropical Storm Jeanne wreaked havoc in Haiti and the Dominican Republic at the weekend when oil workers were battling to restore production on installations in the Gulf of Mexico.

Analysts at Dresdner Kleinwort Wasserstein last week upgraded their long-term forecasts for oil prices in London, estimating that a barrel of Brent crude would cost $25.

The analysts said: "Over the next few years, however, we expect prices to remain well above this level because of supply uncertainty, lack of spare Opec capacity outside Saudi Arabia, and greater Opec resolve to defend prices."