US oil prices are edging towards their highest level in two years amid continued supply disruption in Venezuela and fears of war in Iraq.

On the New York Mercantile Exchange, crude oil for February delivery jumped to $32 a barrel in after-hours trade, the highest since January 2001.

In London, Brent crude oil futures rose $1.38 to $29.72 a barrel.

World oil prices have risen by nearly a third in the past month on fears that a US-led military offensive against Iraq could disrupt supplies from the Middle East, the world's biggest oil exporting region.

The price rally also reflects a dip in supplies from Venezuela, where right-wing business groups and unions have led a four-week long round of strikes against the country's left-wing government.

The oil strike has slowed output from the world's fifth largest oil exporter to a trickle.

Oil flowing?

The government has managed to maintain exports at between 5% and 10% of the usual 2.7 million barrels per day.

In Venezuela, tankers operated by the armed forces began delivering supplies to petrol stations around the country on Monday, after Mr Chavez promised Venezuelans a happy Christmas break.

But Venezuelan government assertions that it has restarted oil production and exports have been dismissed by striking oil executives.

The Supreme Court last Thursday ordered workers in the PDVSA state oil company to return to work.