Libya will withdraw $7 billion of assets held in Swiss banks and end economic cooperation with Switzerland to protest against poor treatment of Libyan diplomats and businessmen, Libyan state news agency JANA said.

The OPEC-member country will also cut oil supplies to Switzerland, JANA cited an unnamed foreign ministry source as saying in a statement.

"Due to the poor treatment a number of Libyan diplomats and businessmen received from the police in the canton of Geneva, the Great Jamahiriyah (Libya) has decided to stop pumping crude oil for Switzerland and withdraw Libyan assets deposited in Swiss banks which are worth $7 billion," the statement said.

"It has also decided to suspend all forms of economic cooperation with Switzerland until the reasons and the motives behind such practices are known," it added.

It was unclear which events in Geneva the statement was referring to. Officials at Switzerland's foreign ministry were not immediately available to comment on relations with Libya.

The decision comes three months after a diplomatic row broke out when a son of Libyan leader Muammar Gaddafi was arrested in Geneva and charged with mistreating two domestic employees.

Hannibal Gaddafi denied the charges and was freed on bail, but the case caused uproar in Tripoli and led to the detention of two Swiss nationals, who were later released.

Staff at Libya's state Maritime Transport National Corporation announced on July 24 they were halting oil exports to Switzerland, but Swiss oil industry officials said later that supplies had not been interrupted.

The dispute appeared to subside last month when the Swiss prosecutor said he had dropped the case against Hannibal Gaddafi after the plaintiffs withdrew their complaint.

But Libyan fuel refining and distribution firm Tamoil said yesterday that Libya, a major supplier, had stopped delivering crude oil to Switzerland.