Russia beckons Belarus to heel in oil supply row

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Russia briefly cut oil supplies to Belarussian refineries this month in the dispute over Belarus's lucrative business in exports of oil products refined from Russian crude, again raising the specter of supply disruptions for EU customers.

But the rift, which helped push U.S. crude above $81 a barrel on Monday, is about much more than energy subsidies.

At stake is the political future of Belarus, which is wedged between Russia and the European Union, and key Belarussian refineries that the Kremlin would like to see in the hands of Russian companies.

Analysts said Russia is using its energy might to bring Belarussian President Alexander Lukashenko to heel after attempts by the former Soviet farm director to leverage dependency on Moscow with overtures toward European powers.

"Russia is playing hardball and bringing Belarus into line," said Chris Weafer, chief strategist at Uralsib Capital, a Moscow investment bank. "Lukashenko doesn't really have any options -- he has nowhere to go except Russia, and the Kremlin knows it."

http://www.reuters.com/article/idUSTRE6043SM20100105