A blast on a critical canal supplying Kosovo's water and power has intensified tensions with Serbia, fueling a heated exchange between the two Balkan nations.

The explosion late Friday punched a hole in a canal providing water to hundreds of thousands of people and the cooling systems at two coal-fired power plants that generate most of Kosovo's electricity.

Kosovo's Prime Minister Albin Kurti immediately pointed the finger at archrival Serbia, calling the incident a "terrorist attack."

He went on to say that Belgrade was copying the Russian "playbook" in Ukraine, trying to knock out power and heating in Kosovo during the frigid winter months.

"This is the reason why we raise the alarm over Russia's alliance with Serbia," said Kurti, as he highlighted the alleged seizure of Russian and Serbian military insignia during follow-up raids.

Serbia has been quick to hit back, with officials denying responsibility and saying the incident would be used as a pretext by the Pristina government to crack down on Serbs living in Kosovo.

Serbia and Kosovo, which has a large ethnic Albanian majority, have been at loggerheads since the end of a war in the late 1990s between Belgrade's forces and ethnic Albanian separatists in what was then a province of Serbia.

Serbia has never recognized Kosovo's 2008 declaration of independence.

But tensions have been particularly high over the last year, centered on the fate of Kosovo's Serbian minority.

'Sophisticated' sabotage

"If an investigation concludes Serbia's involvement, Kosovo may interpret it as an act of war, escalating tensions dramatically," Shpetim Gashi, an independent analyst based in Pristina, told Agence France-Presse (AFP).

Others have said that the nature of the blast in Kosovo's restive north – home to many of its ethnic Serbs – points to a level of sophistication that would rule out amateur sabotage.

"Considering how much police presence and control there has been in the north, this suggests some level of sophisticated organization," said political analyst Agon Maliqi.

"The targeting of critical infrastructure suggests awareness of large-scale systemic impact," he added.

Observers have urged caution until an investigation provides definitive evidence identifying a culprit.

Jeffrey Hovenier, the U.S. ambassador to Kosovo, said Monday that Washington was "not in a position to say who is behind the attack."

"It's early on and these things require careful investigation," he added.

The attack on the canal comes just months ahead of parliamentary elections in Kosovo, with Kurti hoping his hardline policies targeting Serbia will secure him another term.