Libya is stopping oil shipments to Switzerland in protest over the arrest of the son of Muammar Gaddafi, the country's leader, according to a state-owned shipping company.

The Maritime Transport National Corporation also said in a statement on Thursday that all vessels carrying Swiss-made goods had been barred from unloading their cargoes at Libyan ports.

The ban on oil shipments includes both crude oil and refined petroleum products, and amounts to 40 per cent of the company's business, Ali Bilhajj Ahmed, the head of the company, said.

Ahmed said that the company's response was appropriate, saying it is "the least we should do".

The company's workers had staged a protest outside the Swiss embassy in Tripoli.

They threatened "further action" against Swiss authorities if they did not apologise "in the next coming hours" for the arrest of Hannibal Gaddafi in Geneva on July 15.

He and his wife are accused of assaulting some of their staff. The couple were freed on bail after being held for two days.

The Swiss foreign ministry has sent a delegation to Libya with information about the arrest of Hannibal "to prevent a crisis between the two countries".

Julia Slater, a journalist based in Switzerland, said that media reaction in the country has been one of bemusement.

"The impact of what this will have is being played down, and the press has been quite indignant as to how the Libyans are reacting," she said.

"The Swiss authorities also continue say publicly that this will not escalate, and will be resolved soon."

'Problematic' situation

Mohamed Ben-Madani, a North Africa analyst, told Al Jazeera that the situation remains awkward for Switzerland.

"The Swiss government cannot interfere with the judicial process, but the Libyan authorties are demanding that this case be dropped," he said.

"What is also problematic is that Switzerland receives 90 per cent of its oil from Libya, and this dispute now has the potential get much worse."

Libya's port authority lists Hannibal as its official "adviser", and warned of "new escalatory measures" against Switzerland and demanded that Bern "close within the next few hours the case it fabricated" against Gaddafi's son.

A Swiss government spokeswoman said that the authorities were "concerned at the retaliatory measures," but hoped the situation would calm "rapidly".
  
"Diplomatic exchanges are under way right now, and that the supply of fuels is "assured," she said.

Tripoli has already recalled some of its diplomats from Switzerland, suspended the issuing of visas for Swiss citizens, reduced the number of flights to Switzerland and has detained two Swiss nationals on various charges, the Swiss foreign ministry said

Switzerland in turn, has warned its citizens not to travel to Libya.