EU looking at reserves as Moscow cuts oil via Belarus line

European countries reliant on Russian oil are seeking to secure energy supplies and considering tapping strategic reserves after Moscow turned off a pipeline that delivers oil via Belarus.

Supplies to Germany, Poland and Ukraine were cut off as the simmering row between Belarus and Russia escalated sharply yesterday.

Oil prices, however, fell to $56 yesterday as warm winter weather curbed fuel demand in top consumer the United States, giving up earlier gains of more than $1. US crude was down 23 cents at $56.08 (€43.14)a barrel by 1743 GMTin volatile trade. London Brent fell 17 cents to $55.47 a barrel.

Although it controls one fifth of global oil reserves, Russia's latest feud follows the recent production disputes with oil majors Shell and BP. Russia's vice president Sergei Grigoryev confirmed that supplies from the so-called "friendship" or Druzhba pipeline had been halted and were no longer flowing westwards. Normally, the pipe can carry up to 1.2 million barrels of crude a day.

In a separate row, Azerbaijan cut off oil supplies to Russia in protest at the sudden rise in gas import prices it must pay.

Last night, the EU's Energy Commissioner, Andris Piebalgs claimed there was "no immediate risk" to Western Europe, although an emergency meeting of energy ministers may be convened to discuss the issue.

Analysts believe there is no immediate risk of shortages. "With mild weather so far this winter and with memories still strong of the problems this time last year, there are much higher stockpiles of gas and oil," commented Chris Weafer of AlfaBank in Moscow.

With both Poland and Germany able to obtain oil from alternative sources to Russia, they are not as dependant as they are for gas, said Stephen O'Sullivan of Deutsche UFG. Russia did not want a shutdown of supplies to the West, he said, which would raise alarm in Europe, just a year after the problems with Ukraine.

"With oil, there are other options, but with gas, people are getting nervous, frankly. Gazprom is concerned Russian gas will be seen as less reliable," he said, referring to the Russian gas export monopoly.

Two oil refineries in Germany are believed to be hit in the shutdown, which comes almost a year after a row between Ukraine and Russia temporarily closed gas supplies to Europe.

Officials in both Germany and Poland were mystified by the move yesterday, which came without any explanation. In Germany, the plants most affected are in the former east, such as Total's Leuna refinery, which were connected to the network of pipes criss-crossing the former Soviet bloc.

Polish authorities last night insisted that with 80 days of supply reserves, the country's oil refineries would not face any immediate problems, but any shortage could have a ripple effect on the cost of oil, which had been falling sharply in recent weeks.

Bitter exchanges between Russia and Belarus have deepened dramatically in the past week, although the regime of Alexander Lukashenko in Minsk was considered Moscow's closest ally until recently.

Over the weekend, the Belarussian authorities had warned they would be taking Russian state pipeline operator Transneft to court for failing to co-operate with its newly imposed customs duty on oil crossing the country to Western Europe.

Russian authorities had reacted angrily to the new duty, claiming it was a breach of existing agreements between the two countries, which are supposed to have a customs union. Officials in Moscow claimed that since oil supplies were crossing Belarus, they were not due to be taxed.

Mr Grigoryev said Transneft had been forced to act because Belarus had been siphoning off oil to pay for the new transit duty.