LONDON, Jan 14: Oil prices soared to a new two-year high here on Tuesday on worries that a war in Iraq is drawing closer, dashing hopes among oil consumers that an Opec decision to hike output would restore calm to jittery markets.

The price of benchmark Brent North Sea crude oil for February delivery rose as high as 31.25 dollars per barrel — the highest level since December 2000 — before easing somewhat to 30.70 dollars, up 50 cents on the day.

In New York, reference light sweet crude February-dated futures climbed 24 cents to 32.50 dollars per barrel in early deals.

Analysts said the rally had been fulled by comments from UN chief weapons inspector Hans Blix, who told the BBC his team had found illegal materials in Iraq, though it was unclear whether they were related to weapons of mass destruction.

The surge in prices wiped out any brief respite for oil consumers provided by a decision by the Organisation of Petroleum Exporting Countries (Opec) in Vienna on Sunday to raise its output quota by 1.5 million barrels per day from February.

The move was aimed at stabilising oil markets shaken by a six-week-old strike in Venezuela which has choked off oil exports and by a US military build-up for possible war in Iraq.

The market squeeze has hit US oil stock levels, and traders were waiting nervously for the latest snapshot of US crude oil inventories on Wednesday for clues on whether a modest rise revealed the previous week had been a blip or a sign that the Organisation of Petroleum Exporting Countries had already moved to make up the shortfall.—AFP