Venezuela Protest Worries Analysts

President Bush yesterday said rising oil prices could damage the US recovery but indicated he was prepared to take fiscal and other action to ease the pain.

His comments came as a one-day national strike paralysed crude exports from Venezuela, the world's fourth biggest supplier and an important US provider.

Oil prices for Brent blend retreated on world markets by 40 cents to $26.62 helped by an easing of tension in the Middle East. Saudi Arabia effectively promised to make up any shortfall from Iraq's decision to halt output.

Mr Bush refused to rule out a cut in gasoline taxes and bringing out oil from the country's strategic petroleum reserves to counter the impact of rising petrol prices and ease demand/supply problems.

The potential for an oil shock is "why we've got to be very cautious about making bold predictions about the economy," he told the Wall Street Journal. The oil market turmoil emphasised the need for Congress to pass his energy plan, especially a provision to allow drilling to take place in the Arctic national wildlife refuge.

Tens of thousands of Venezuelans stayed at home yesterday as opponents of President Hugo Chavez intensified a protest campaign against his increasingly authoritarian regime. Above a women's group supports the protest against the state oil group PDVSA.

The latest stoppage comes on the back of a six week campaign by staff at PDVSA angry at Mr Chavez's decision to remove directors and replace them with his appointees.

The government insisted all was normal in the country but officials at Venezuela's largest oil refining complex, Amuay Cardon, said it was virtually paralysed.

Roger Diwan, director of Washington consultancy Petroleum Finance Company, said the situation in Venezuela was pre-insurrection and "very serious".