Oil rises on Russia's row with Belarus

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The Independent Online

Oil spiked above $80 per barrel yesterday as fears that a tariff spat between Russia and Belarus could affect European supplies coincided with a continued cold snap.

Although both Russia and Belarus say the row will not affect oil flow to the West, prices were pushed up by memories of last winter's Russia/Ukraine dispute that shut down Europe's gas supply for several days.

The difficulties are caused by Russia's efforts to unwind energy subsidies to former Soviet satellites. The majority of the 1.3 million barrels of oil per day shipped through Belarus from Russia are exported. And under the deal that expired on New Year's Eve, Belarusian refineries paid only a third of Russia's standard export tariff.

Attempts to broker a new deal are struggling. Belarus says it should be allowed to stick to the low tariff. Russia has other ideas. Both governments say the oil is still flowing and exports are safe. But there were reports that Russia cut its supplies for Belarusian domestic use at the weekend, and Belarus was yesterday threatening to cut electricity routed through its territory to Russia's Kaliningrad.

The trans-Belarus Druzhba pipeline delivers 15 per cent of Germany's oil and three-quarters of Poland's. Two years ago, Russia turned off the oil to Belarus, cutting supplies to Germany and Poland for several days.

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