The cost of oil jumped yesterday as nervous dealers kept a watchful eye on the looming conflict in the Gulf which threatens to interrupt supplies and send prices soaring.

Oil industry benchmark Brent crude surged by 1.52 dollars at one stage before slipping back to 41 cents up at 30.54 dollars a barrel.

Extreme volatility has been the theme for oil prices in recent weeks as the uncertainty of the build up to war in the Gulf adds to fears about the short-term security of supplies.

Analysts are split over what impact the start of fighting could have on prices.

Some argue a war in Iraq, the world's seventh largest oil exporter, could be contained and not hit oil supplies from the whole Middle East.

Others believe that turmoil in the Middle East, which supplies two-fifths of globally-traded crude, sparked by the invasion of Iraq, would see supplies disrupted, leading to rocketing prices.

Higher crude oil prices have a knock-on effect on the wider economy, pushing up prices for petrol, heating oil and other fuels, which in turn raise the cost of energy and transport for households, industry and motorists.

But analysts gave the market some reassurance today that supplies were sufficient to cover needs.

Kevin Norrish, oil market analyst at Barclays Capital, said: "If there was a large-scale problem such as a chemical weapons attack on a facility of a blockade, the price could go up to 45 dollars to 50 dollars for a short space of time.

"Simply having Saddam Hussein setting fire to oil wells would not be enough."

Supplies from Iraq are expected to slow to a drip later this week as many buyers have stopped ordering oil from the state.

During the Gulf War in 1991, oil prices hit a high of 41 dollars and analysts believe this could be matched again this time.

The Organisation of Petroleum Exporting Countries (Opec) pledged it would fill any shortfall in supplies if war disrupted oil flows.