Power play

Good thing it's been a mild winter in Europe, because supplies of Russian oil to Poland, Ukraine, and Germany have just been put in a squeeze.

This all began late last year, when Russia decided to double the price of the natural gas it sells to Belarus.  This came as rather a shock to Belarus, heretofore Russia's bosom buddy, but Russian President Vladimir Putin is — depending on your point of view — "using energy as a weapon" to keep former Soviet states in the Russian orbit, or ending Soviet-legacy subsidies that kept energy prices to former Soviet states super-low.  Or both.

By year's end Belarus agreed to go along…but then it slapped a user fee on the Russians for the right to send oil through Belarus pipelines, which the Russians are refusing to pay.  So, as a new week begins the flow of the oil through Belarus to points west and south is getting squeezed, and there's no telling how the dispute will play out.

The Daily Reckoning