Oil market jitters as strike grips Nigeria,

A general strike gripped Nigeria on Wednesday, posing the first significant test for the country's new president and putting oil markets on edge over supplies from one of the world's top crude exporters.

The main labour union decided to go ahead with the strike after the government of President Umaru Yar'Adua, who was only sworn in late last month, refused to fully reverse a 15-percent hike in the price of petrol.

In the commercial capital Lagos, streets were free of the habitual rush-hour logjam with barely one-tenth of the normal traffic on the roads, while only a few senior government officials showed up for work in the administrative capital Abuja.

Most government schools were closed across the country.

The walkout, which could further hamper oil exports from Nigeria -- Africa's biggest oil producer and the world's sixth largest exporter -- sent crude prices to their highest levels in nine months on Monday.

But it was not immediately clear to what extent production might be affected by the labour action.

"There's no sign of anything being paralysed for the time being," one oil industry source said.

One quarter of Nigeria's total daily output of 2.6 million barrels is already lost due to unrest in the southern Niger delta region.

Other union officials told AFP they were pleased with support for the strike.

"Compliance by Nigerians is on, and it will come up gradually till it reaches its peak. This is just the beginning," Elijah Okougho, secretary-general of the National Union of Petroleum and Natural Gas Workers (NUPENG), the blue-collar oil workers' union, told AFP.

Labour movements decided early Wednesday to proceed with the strike after the government acceded to a number of their demands but refused to fully reverse an increase in petrol prices.

The government instead renewed its offer to halve the price hike, arguing that would be "a sufficient acknowledgement of the difficulties arising from" the increase.

Unions had initially given the government until midnight on June 17 to reverse a doubling of value-added tax (VAT), a 15-percent hike in fuel prices, and to review a decision to sell two state-owned oil refineries.

On Monday, the government of new President Umaru Yar'Adua proposed to reduce the new fuel price from the initially planned 75 nairas (0.44 euros/0.59 dollars) to 70 per litre, against 65 nairas previously.

It also said it was prepared to scrap VAT increase, which outgoing president Olusegun Obasanjo had imposed on the last day of his term on May 28 and undertook to raise salaries 15 percent retroactively from January 1.

Fear of further cuts to exports sent New York's main oil futures contract, light sweet crude for delivery in July, to 69.15 dollars on Monday -- the highest point since September 1. It slipped to 68.90 on Wednesday.

The last time exports were seriously affected by a strike was in October 2004 when the government started allowing private oil marketers to import and fix prices.

source:www.africasia.com