LONDON (Reuters) -- Oil prices rose on Friday as news of a rocket attack on Iraq's oil ministry inflated a risk premium in a market already fearful that Middle East violence will disrupt crude supplies.

Brent crude oil in London jumped 32 cents to $29.88 a barrel, while New York crude futures rose 26 cents to $32.12 a barrel after hitting eight-month highs above $33.50 a barrel earlier this week.

Prices rose after guerrillas fired rockets from donkey carts into Iraq's Oil Ministry compound and two Baghdad hotels used by foreign contractors and journalists, in the latest strikes on targets linked to the U.S.-led occupation.

Flames and smoke belched from the oil ministry complex, which controls Iraq's most important industry, crucial for funding reconstruction after decades of conflict and sanctions.

Traders are worried about a tide of Middle East violence that has included bomb blasts in big OPEC oil producers Saudi Arabia and Iraq this month, as well as Thursday's bombings in Turkey.

Oil prices are at their strongest level since just before March's U.S-led invasion of Iraq, after rising around 20 percent since OPEC agreed in September to cut production by 3.5 percent from November.

"With these types of unpredictable terrorist actions erupting, markets are susceptible to sharp, upward moves," said Edward Meir of brokers Man Financial in a report.

Repeated sabotage has delayed the post-war recovery of Iraq's oil industry, holding exports below 1.6 million barrels per day compared to 2.2 million bpd.

Iraqi officials said this week the country's northern oil export pipeline is not secure enough to restart despite new U.S.-led forces deployed to guard it. The pipeline has been closed since March.

OPEC, which controls half the world's oil exports, meets on December 4 to review output policy and leading cartel officials have said oil prices were not high enough to justify the cartel raising production.

Indonesia's oil minister Purnomo Yusgiantoro, who will take over as OPEC president in January, said OPEC should consider keeping its production ceiling unchanged if prices stay close to current levels.

Analysts say an OPEC supply cutback would upset consuming nations, which fear the economic impact of higher energy costs.

Some of oil's price strength comes from concern over a possible shortfall of new gasoline blends to be introduced in parts of the United States from January 1.

On Wednesday, a U.S. government reported that gasoline, distillate and heating oil stocks fell last week, offsetting a rise in crude oil inventories.

Rising demand in Asia is also sapping global supply, with government data showing China's crude imports in the first 10 months of this year topping 2002 levels by seven percent.