Brent price at low despite Russia oil embargo fears

Fears over a Russian embargo on oil to Germany and eastern Europe failed to spook oil markets as the price of Brent crude fell by as much as a dollar a barrel today on low demand during the mild winter weather in the US and Europe.

Brent crude struck a 14-month low at one stage today before coming back to $54.70, down 90 cents on the day.

In a major stand-off between Russia and Belarus, senior officials flew from Minsk to Moscow today for high-level talks aimed at ending the Kremlin-ordered blockade of the Druzhba pipeline running through Belarus to Poland and Germany and on another branch through Ukraine to Hungary, Slovakia and the Czech Republic.

The pipeline closure comes after the Kremlin increased its pressure on neighbouring Belarus, accusing it of stealing supplies as it forces through increased charges to nearer international market prices. Fears for western European supplies and the price of petrol on UK forecourts were, however, dismissed by industry analysts, who played down the effect of the political row which is in any case expected to dissipate quickly.

"Refineries in the countries involved all have working stocks of several days," said the International Energy Agency.

"Each of the countries involved has strategic reserves. The market is quite capable of handling this situation."

Capital Economics' Neil Shearing said the closure of gas pipelines through Ukraine which so spooked markets 12 months ago was much different.

This year global supplies are not so tight and the winter weather not so harsh, said the economist, while support for Ukraine is nowhere near the same as for Belarus, an international pariah for its continuing soviet-style regime.