Shares in Rosneft, Russia's largest oil major, plunge on legal problems in the West

Reuters broke news on March 17 that Rosneft, Russia’s largest crude oil producer, may face a deadlock in oil exports after bankrupt rival YUKOS won US and British court injunctions, making cash payments to Rosneft in the West very complex. The Reuters team in Moscow learnt about the injunctions from trading and industry sources and competitors could not match the report, with Bloomberg and Russian agencies forced to quote Reuters. Shares of Rosneft fell as much as 3 percent and the turnover rose four-fold from ordinary volumes on the report. The shares first heavily underperformed the broader market, which was rising with crude prices, but then the news started to drag down the broader index. Major Western and Russian brokerages issued flash reports saying the development could change investor risk perception around Rosneft and other Russian state-run companies in the long-term. Crude traders said they were also concerned about the development as Rosneft produces and exports over a fifth of Russia’s overall crude volumes and its rapid growth has helped Moscow outpace Saudi Arabia as the world’s largest oil producer.