The country's vital oil business has been thrown into turmoil after the strike was launched on Tuesday in protest at a new board of directors for the state oil company.

Business leaders - who with unions devised Tuesday's all-out strike - agreed to observe the second day of stoppage.

But earlier President Hugo Chavez denied anything was out of order, asking: "What strike?" and government offices were said to be running as usual.

Foreign and local trade and shipping sources continued to report disruptions to output and exports from the world's fourth largest oil producer, caused by an escalating six-week-old labour protest by employees of the state oil company PDVSA.

The strike was called by the million-strong main union confederation, CTV, and the largest business association, Fedecamaras, to support the PDVSA managers' protest against a new board of directors seen as appointees of President Chavez.

The decision by many in the oil trade union, Fedepetrol, to join the strike threatened to paralyse an industry supplying Venezuela with 80% of its export revenue.

Global problems

The strike could also cause more nervousness in the global oil market following Iraq's decision to suspend oil exports for 30 days.

Iraq and Venezuela jointly export about 4.5 million barrels of oil per day. Venezuela alone exports nearly one million barrels of crude oil daily to the United States.

Venezuela's largest oil refinery, the Amuay-Cardon complex, was virtually shut down on Tuesday.

A manager of the plant, which normally produces 960,000 barrels a day, said: "With no products leaving, even by ship, you have effectively stopped the refinery."

Other refineries appeared to have either closed down or were operating well below capacity.

Attack on Chavez

The strike is seen as a powerful attack on President Chavez, who is fighting opposition to his three-year rule from hostile labour and business leaders as well as political foes.

Analysts said the strike, coupled with the PDVSA oil dispute, clearly sapped the government's ability to guarantee smooth, day-to-day running of the nation, but Mr Chavez and his administration insisted the strike was a failure.

"This country has not halted and will not be halted," Mr Chavez said, dismissing the strike organisers as "subversives" seeking to destabilise and topple his government.

He sent senior ministers and military chiefs to key oil facilities to ensure they continued to operate.

CTV leader Carlos Ortega, whose authority has not been acknowledged by Mr Chavez, claimed 80% support for the strike.

"We can consider the strike a total success," he said.

Riot police surrounded the National Assembly to prevent trouble.

Teachers, doctors, the Roman Catholic Church, and numerous civic groups backed the strike in defiance of government threats to sack public employees involved in the "illegal" action.

Mr Chavez's government had made efforts to avoid a repeat of a successful general strike on 10 December which led to a 20% rise in the minimum wage.