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Fears of oil shutdown as Nigerian strike continues

Threat of shutdown in fifth-largest oil exporter to US could shake oil futures amid concern about worldwide supply

Nigeria’s government and labour unions have failed to end a paralysing nationwide strike over high gasoline costs, potentially sparking an oil production shutdown in a nation vital to US oil supplies.

Nigeria Labour Congress president Abdulwaheed Omar told journalists outside the presidential palace: “We have not reached a compromise.” He avoided answering direct questions about whether oil production would shut down in Nigeria, Africa’s most populous nation.

The Petroleum and Natural Gas Senior Staff Association of Nigeria had threatened to stop all oil production in Nigeria at midnight. President Babatunde Ogun was not immediately available for comment.

Nigeria, which produces about 2.4m barrels of crude a day, is the fifth-largest oil exporter to the US. While the country has a several-week stock of oil ready for export, the threatened shutdown on Sunday could shake oil futures as traders remained concerned about worldwide supply.

The strike began on Monday, paralysing the nation of more than 160 million people. The root cause remains gasoline prices: President Goodluck Jonathan’s government abandoned subsidies that kept gasoline prices low on January 1, causing prices to spike from .70 per gallon (45 cents per litre) to at least .50 per gallon (94 cents per litre). The costs of food and transportation also largely doubled in a country where most people live on less than a day.

Anger over losing one of the few benefits average Nigerians see from being an oil-rich country, as well as disgust over government corruption, have led to demonstrations and violence that has killed at least 10 people. Red Cross volunteers have treated more than 600 people injured in protests since the strike began, the International Committee of the Red Cross said on Friday.

Even if strikers are only partially successful, fears of tightened global supplies could raise oil prices by – per barrel on futures markets next week. Gasoline prices would follow, rising by as much as 10 cents per gallon and forcing US drivers to spend an additional m a day at the pump.

Experts predict the national average in the US could rise as high as .25 per gallon in 2012. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds