The Iraqi military has surrounded striking oil workers in southern Iraq, labor organizers report, as the workers’ remained defiant in their action to block strategic pipelines near Basra.

Iraqi Prime Minister Nuri al-Maliki has vowed a harsh response as the shutdown’s effects begin to ripple through Iraqi markets, and at least one neighboring province braces for worsening fuel shortages.

Prime Minister Maliki has ordered the arrest of union leaders, UPI reports, citing the British-based Naftana, an activist organization that supports the union’s demands.

Hasan Juma' Awad, the head of the Iraqi Federation of Oil Unions, said that no arrests have been made, communicating with UPI via mobile phone, but that the Iraqi security forces were present and had informed him that they would be the ones making any arrests.

The arrest warrant reportedly accuses the union organizers of "sabotaging the economy," and Maliki said that an "iron fist" would brought against those who interfered with Iraq’s petroleum trade, UPI reports, citing Naftana.

The strike began Monday with the Iraqi Pipelines Union, which organizes workers who transport petroleum products via Iraq’s pipeline system, targeting pipelines that deliver refined products to Baghdad and elsewhere in Iraq.

However, Awad threatened that the strike will expand to affect Iraq’s oil exports as well, UPI reports.

As reported earlier, the strikers’ immediate demands include the resignation of the general manager of Iraq’s pipelines, and the financial and administrative independence of the company from the central government’s oil ministry.

According to the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM), the military surrounded the workers on Tuesday, after they blocked off a second pipeline feeding Iraq’s markets. In a statement posted on its website, the federation of energy and oil workers called for the Maliki government to resolve the dispute peacefully.

the pipelines company recently blocked an order by the prime minister to release delayed benefits to oil workers, and stopped an allowance of 50,000 Iraqi dinars (approximately US$40), to which the workers say they are regularly entitled. The IECM statement was made available on a website aligned with the IFOU.

UPI, however, points out that the conflict between the oil workers’ unions and the Iraqi authorities is part of a “larger picture,” including the workers’ opposition to the proposed oil law, which they claim will hand excessive control over Iraq’s oil wealth to foreign concerns, and a series of other demands presented to the central government last month.

These 16 demands, posted on the IFOU-aligned website, include hiring, retention, payment, benefits, and administrative issues. A strike was averted in late May when the prime minister signaled that he would negotiate over the demands,

Meanwhile, the strike’s effects are beginning to ripple through Iraqi markets, with neighboring Dhi Qar province reporting severe fuel shortages. From Nasiriya, Iraq al-Ghad reports in Arabic that “columns of vehicles” are backed up at private and public pumping stations, as the area faces its worst fuel crisis in a year and a half.

A continuing shortage could set off a “great catastrophe” if the shortage leads to the immobilization of vehicles needed for basic requirements of life, the agency reports.

'Ala Hasan Shaqi, head of the power committee in the provincial council, said that there were efforts to send several large fuel trucks to Basra from Dhi Qar province in order to fill them with a large quantity of fuel in order to try to contain the fuel crisis by stockpiling, Iraq al-Ghad writes.