NEW YORK, Jan 4: Oil prices jumped another dollar Friday on fears that a strike in exporter Venezuela would spark a supply crisis in the United States, where stockpiles are dwindling just as winter fuel needs reach their peak.

Markets in New York and London rose within 50 cents of two-year highs as the possible supply crunch compounded traders’ anxiety about a US-led war on Iraq, which could deepen shortages if exports are halted there too.

US crude futures gained $1.35 or 4.2 per cent to $33.20 a barrel while international benchmark Brent crude oil jumped $1.35 to $30.78 a barrel.

Both markers have soared by 30 per cent since mid-November.

The world oil system will have extremely low inventory cover as it enters what is perhaps the most geopolitically uncertain period for some twenty years, said Paul Horsnell of investment bank J.P. Morgan.

Oil inventories in the United States, the world’s top consumer, plummeted by 16 million barrels last week as Venezuelan exports slowed to a trickle, according to government data released on Thursday.

Another fall of this magnitude would bring inventories down to their lowest level since 1976, and remove all remaining operational flexibility from the system, Horsnell said.

Current crude oil prices, already high enough to damage economic growth in the industrialized world, have yet to reflect the true scale of the supply problem, Horsnell said.

Venezuela was the world’s fifth largest oil exporter and usually supplies about 13 per cent of US imports.

Exports have virtually ground to a halt since early December due to the strike aimed at ousting President Hugo Chavez, and no resolution is in sight.

The US government warned that US refiners will be forced to significantly reduce their production of gasoline, heating oil and other petroleum products if crude stocks fall much further.

Meteorologists at investment bank Salomon Smith Barney predicted a big wave of Arctic air would blanket large parts of the United States in the second week of January, which could bring the lowest temperatures so far this winter.

Africa’s top producer Nigeria is already offering extra oil into world markets as prices soar, but the world’s top exporter Saudi Arabia has yet to loosen the taps to replace lost Venezuelan barrels, oil traders said.—Reuters