World Oil Prices Surge

World oil prices hit two-year highs Friday as concern about winter fuel supplies in the U.S. combined with mounting rhetoric against oil supplier Iraq and renewed threats against U.S. economic targets.

Fears over low fuel supplies sent U.S. heating oil futures skyrocketing to $1.11 a gallon, a level not seen since December 1979, after rising 20% in the last week.

Fuel suppliers in the Northeast, the world’s biggest heating oil market, are seeking an emergency release of strategic stockpiles to ease shortages as heavy snows and forecasts of arctic temperatures hit the region. Crude futures hit $35.25 a barrel -- the highest since November 2000 -- before closing up 96 cents at $35.12 in New York trading.

Traders also remain concerned that an attack on Iraq, the world’s No. 8 oil exporter, could coincide with a crippling strike in Venezuela, leaving supplies dangerously thin during the high-demand winter season in the Northern Hemisphere.

The U.S. Energy Information Administration said Friday that low supplies and the tensions in Iraq and Venezuela could combine to keep the average price for U.S. crude oil above $30 a barrel for the rest of this year.

That projection is bad news for consumers and could hinder the economy’s recovery.