LONDON Oil prices on Monday jumped towards their highest level since September on fears of a full-blown U.S. attack on oil exporter Iraq after Baghdad ruled out a return of UN weapons inspectors.

International Benchmark Brent crude oil climbed 58 cents to $23.91 a barrel by mid-afternoon in London, extending a rally that has added a quarter to the cost of a barrel in a month. U.S. Light, Sweet crude added 48 cents to $24.32 a barrel.

Prices briefly hit a six-month high above $24 last week on a combination of Iraq war fears, a strengthening economic recovery and deepening supply cuts by the OPEC cartel.

"It's very hard to see a downside to the oil price at the moment," said Geoff Pyne, an oil market analyst for Sempra Energy Trading in London.

"If you view military action against Iraq as likely, which I do at some stage, then exports are almost certain to stop and I would regard that as very serious," he added.

The United Nations and the United States have been demanding that Baghdad allow inspectors to return after a three year absence, but Iraqi Vice President Taha Yassin Ramadan said on Sunday they were Western spies and had no need to return.

Jordan's King Abdullah said on Sunday any U.S. attack on Iraq would have catastrophic repercussions in the oil-rich Middle East, which holds some two-thirds of global petroleum reserves.

Any interruption in Iraqi supply, coming at a time when the economic recovery should be gathering steam, could exacerbate the impact of OPEC's supply cuts, Reuters quoted Pyne as saying.

Iraq accounts for five percent of world oil exports.

OPEC Target

Talk by OPEC ministers of resuming a target of $25 for its oil exports, ahead of a policy meeting on Friday, was another bullish factor for oil, dealers said.

United Arab Emirates Oil Ninister Obaid bin Saif al-Nasseri said OPEC, which controls more than half of world exports, would maintain current output limits for the second quarter of the year.

OPEC Secretary-General Ali Rodriguez said in early March he expected the cartel of mostly Middle Eastern exporters to freeze quotas for a whole year after a big cut in January, although Nasseri said no decision would be made about the second half of the year at this meeting.

Analysts believe the Organization of the Petroleum Exporting Countries could drive prices back towards historical highs last seen in 2001 if the world economy recovers as expected.

"The main thing that concerns me is when OPEC decides to raise quotas. I think it ought to be mid-year, but if they can avoid it they might well do so," Pyne said.

Rising energy costs could threaten a recovery in the industrialized world, Pyne said, and hurt demand for OPEC's exports.

High prices also undermine OPEC market share, already at its lowest since the 1980s, by encouraging investment in marginal areas outside the 11-member group, he added.