NEW YORK – Oil prices jumped more than 2 percent Thursday as a strike in Venezuela sliced into refining and shipping operations in the world's fifth largest exporter.
A fierce snowstorm in the U.S. Northeast, the country's biggest user of heating oil, also boosted prices, with U.S. winter fuel supplies running below normal levels.
U.S. crude futures in New York rose 58 cents to $27.29 a barrel, and international benchmark Brent crude oil jumped 62 cents to $25.80 per barrel in London.
"Venezuelan exports are going to be disrupted with the ports closed," said Nauman Barakat, a trader at FIMAT International Banque. "That really pushed the market up."
Shipping agents said Venezuela's main oil export terminals had stopped loading Thursday morning on the fourth day of a strike called by the opposition to force a referendum on the presidency of Hugo Chavez.
The state oil company said it had slashed processing rates at the western hemisphere's largest oil refinery Amuay-Cardon, a major supplier of gasoline and heating oil to the United States.
Several captains of the state-owned oil tanker fleet joined the action, and Chavez ordered the military to take control of vessels whose crews refused to operate.
OPEC member Venezuela pumps three million barrels per day of crude oil, and supplies 13 percent of U.S. imports.
The strike compounded market fears over oil supply security, already in a high state of alert over the confrontation between Iraq and the United States.
President Saddam Hussein said on Thursday he was ready to give U.N. weapons inspectors a chance to disprove American allegations that Iraq possesses weapons of mass destruction.
But Washington, which has threatened to go to war unless Iraq can prove it has renounced biological, chemical and nuclear arms programs, insisted it had intelligence backing its contention.
No inspections were taking place on Thursday or Friday because of the Muslim Eid al-Fitr holiday, but all eyes were on Sunday's U.N. deadline for Iraq to come clean about its programs.
Iraq insists that, since it has no such programs, it will merely be listing "dual use technology" that has peaceful as well as military applications.
The Middle Eastern country ranked as eighth largest oil exporter last year, selling crude under an exception to United Nations sanctions.
Fears of supply disruption in the event of conflict with Iraq have been offset in recent weeks by a sharp increase in crude supplies from producers in the OPEC cartel.
OPEC's leakage above formal quotas topped three million barrels per day for a second straight month in November, according to a Reuters survey of industry officials and monitors.
Analysts expect the extra supplies to replenish U.S. oil stocks, which are running below normal levels ahead of the northern winter when heating demand peaks.
Heating oil stocks last week fell 17 percent below last year, according to federal figures even before this week's heavy snowfalls across the Eastern part of the country.
Temperatures along the U.S. East Coast will be unseasonably cold to the middle of next week but will then moderate, with milder weather persisting through the end of the month, Salomon Smith Barney meteorologists forecast on Thursday.