In September 2006, the oil workers' union had palnned a strike, but called it off after the government promised to look into their demands for higher wages.
"Whatever the government has offered last night as an ad hoc payment has been considerably improved, so we have withdrawn the strike," Ashok Singh of Oil Sector Officers' Association, an umbrella union for industry employees, said.
R.S. Sharma, chairman of the state-run Oil and Natural Gas Corporation, said oil production not been affected by the short-lived strike.
"We are now working on the finer details of the settlement," he said.
Bharat Petroleum Corp, a smaller oil company, also said its refineries were running at 100 per cent capacity, but Hindustan Petroleum Corp said earlier that its refining operations had been affected.