Nigerian oil workers may strike Sunday
NEW YORK – One of the biggest suppliers of oil to the United States may shut off the spigot this weekend, pushing crude and gasoline prices higher for Americans.
Nigeria, which supplies 8 percent of U.S. oil imports, could see production halted if striking workers walk off the job Sunday. Workers are demanding the return of a vital government fuel subsidy that has kept gasoline prices low in that impoverished and restive nation of 160 million people.
It’s unclear how much of Nigeria’s production would be affected. At worst, the country’s 20,000 unionized oil workers could take as much as 2.4 million barrels of daily crude production off the market, striking at the heart of Nigeria’s oil-dependent economy.
Even if strikers are only partially successful, fears of tightened global supplies could raise oil prices by $5-$10 per barrel on futures markets next week. Gasoline prices would follow, rising by as much as 10 cents per gallon and forcing U.S. drivers to spend an additional $36 million a day at the pump. Gasoline now costs $3.39 per gallon after rising 11 cents since the start of the year. Experts predict the national average could rise as high as $4.25 per gallon in 2012.
The Nigerian government already has offered a smaller, temporary fuel subsidy and will meet with union leaders today. The strike could be called off, but protesters have promised to halt production if they don’t get the full, $8 billion subsidy restored.
Disruptions would have a long-term impact on Nigeria’s economy. Union president Babatunde Ogun said it could take six months to a year to restart oil fields once they’re shut down.
The threat to shut off oil production is the latest move by protesters after a week of violent, anti-government clashes throughout the country. The strike began Monday to challenge President Goodluck Jonathan’s decision to abandon the fuel subsidy.
Oil prices fell by $2.86 this week to end at $98.70 per barrel in New York. Prices dropped as Europe delayed a decision to ban Iranian imports.