Volatile oil prices dipped on Friday, but still ended the week above $30 a barrel, amid worries about a prolonged military campaign in Iraq and the stoppage of production in Nigeria following ethnic clashes.

Strong early gains eased as the UN renewed a program to use revenue from Iraq's oil sales to buy food and medicine. Iraqi exports have been at a standstill for the past week and are not expected to resume soon despite Friday's UN vote.

US light crude touched $31.05 a barrel overnight, its highest price since the war began, before dealers pocketed profits and prices fell to $30.16, down 21 cents on the day.

In London, benchmark Brent  shed 47 cents to $26.35 a barrel.

US prices have bounced back more than $3, or 12 per cent, in a week after slumping 25 per cent in the run-up to war, when dealers took the view that the fighting would not last long.

But fears of a protracted war on the ninth day of the campaign were underlined with the order by Washington for another 100,000 troops to move to the Persian Gulf.

Iraq's main export outlet, the Gulf port of Mina al-Bakr off the southern coast of the country, has been closed since the US launched its offensive last week.

Mina al-Bakr is technically ready to resume operations, but the US army officer in charge of oil rehabilitation said booby traps, blazing wellheads and neglect mean it will take months to get Iraq's southern oilfields pumping again.

The UN Security Council vote on Friday to accelerate humanitarian aid flows will not depend on the resumption of oil flows as some $10 billion is already in a UN account to buy supplies.

Iraq has been sending oil by pipeline from its northern fields to the Turkey's Mediterranean port of Turkey but there are no tankers there to load supplies as oil traders say they banks are unwilling to issue letters of credit.

"The assumption to date has been that Iraq's export disruption would end by the start of the third quarter, which coincides with a significant global increase in the demand for OPEC oil," said oil analyst Michael Rothman of Merrill Lynch.

"If Iraq's production outage extends beyond the second quarter period, OPEC would not be able to meet market requirements."

Saudi supply

Iraq ranked as the world's seventh largest oil exporter before war began with sales of 1.7 million barrels per day. But Saudi Arabia lifted supplies in the weeks before bombing started to prevent shortages, cutting prices that peaked just short of $40 for US crude at the end of February.

In March, Saudi Arabia hiked output to 9.6 million bpd, according to a report by industry consultants Petrologistics. This is its highest rate in 21 years and 1.6 million bpd more than the kingdom's OPEC quota.

OPEC Secretary-General Alvaro Silva said on Friday there was plenty of supply in world markets, and feared a glut of oil over the next few months.

"Even with the cessation of Iraqi exports and the temporary oil output reduction in Nigeria there is still plenty of oil on the market," Silva told reporters in Vienna.

The closure for nearly a week by oil companies operating in Nigeria's western Delta region of 37 per cent of the country's output has underpinned this week's price gains.

The announcement on Friday of a general strike by Nigeria's main union from April 1 risks creating further unrest as the OPEC nation gears up for presidential and local polls due to start April 12.

Nigerian crude produces a high yield of gasoline making it an ideal grade for US refiners now looking to crank up output to meet peak summer holiday motoring demand.

US gasoline stocks are eight per cent lower than a year ago and US crude stocks are 17 per cent down on the year, US government figures released this week showed.

Oil multinationals Shell and ChevronTexaco said they were unwilling to resume production of 800,000 bpd after ethnic clashes forced evacuations of staff earlier this week.

"We are still looking for a number of assurances that it is safe to go back," said ChevronTexaco spokesman Andy Norman. "It is down to the government and security forces to provide the assurances we need to return."

Troop reinforcements sent to the region have raised fears of a military offensive against Ijaw militants, who are threatening to blow up oil installations in areas they control.