A Nigerian militia leader who had threatened to launch a full scale war in the country's oil-rich south says his forces will stop fighting the government and hand in their weapons.

Mujahid Dokubo Asari, leader of the Niger Delta's People's Volunteer Force, signed a deal with President Olusegun Obasanjo Friday night.

A pro-government militia, the Niger Delta Vigilante Force, also agreed to disband.

Mr. Asari said while the deal is a step forward, there is still more to be discussed. He said talks with the president will resume in one week.

The militia leader has been demanding that residents in the southern Niger Delta region have a greater share in the country's vast oil wealth.

He had threatened to begin attacking oil installations on Friday if his demands were not met.

The threats helped to send world crude oil prices to a record high of more than $50 a barrel.