Indigenous communities have blocked roads and waterways to pressure the government to revoke the investment laws that Peru passed under a free-trade pact with the United States, and to revise concessions granted to foreign energy companies. Peru is encouraging investment as it tries to transform itself from a net oil importer into a net exporter.

"The indigenous protest has forced us to stop, totally," Luis Suarez, head of maintenance of the 40,000 bbl/d, 850 km pipeline run by state company Petroperu, told reporters.

Output has been reduced since the protests began in April, but the problem has now grown more acute. Mr Suarez said that cessation of operations will likely hurt companies like Petroperu and Pluspetrol, which use the pipeline to transport crude oil from the jungle to a coastal refinery.

Peru, which has auctioned-off mining and energy concessions throughout most the country, has drawn criticism from environmental and human-rights' groups that say development threatens the environment and risks exposing remote tribes to new and deadly diseases.

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The government declared a state of emergency in late May in the central regions of Loreto, Amazonas, Ucayali, and Cuzco, a move that allows it to send in the armed forces and impose curfews to break up demonstrations: the protesters responded by calling for an "insurgency", a threat that the indigenous leader Alberto Pizango later disassociated himself from, saying that the word was open to "bad interpretations".