World oil prices rebounded strongly yesterday from four-month lows as US-led forces met heavy resistance in the campaign in Iraq, dashing hopes for a quick end to the war.

Substantial production closures in Nigeria because of ethnic unrest in the oil-rich Niger Delta also helped spur prices higher, traders said.

US light crude jumped $1.62 to $28.53 a barrel, after falling 25 per cent over the previous week. In London, benchmark crude was up $1.43 at $25.78 a barrel.

"The oil market has been behaving as if peace has broken out, but the level of Iraqi resistance so far suggests the war could drag on with consequences for oil prices," said Mr Adam Sieminski, oil analyst at Deutsche Bank.

"The oil market has become complacent about the war, its risks and the risks of the post-war situation," said Mr Paul Horsnell, oil analyst at merchant bank JP Morgan.

Last week dealers were optimistic that the war would prove swift after early US and British military gains in the southern Iraqi oilfields and as crude exports from Iraq's Gulf neighbours flowed unhampered.

But over the weekend, Iraq paraded US prisoners of war on TV and inflicted its heaviest casualties so far as resistance stiffened as US troops drew closer to Baghdad. A speech by a defiant Iraqi President Saddam Hussein broadcast yesterday helped boost the buying of oil futures.

Iraq was ranked seventh among crude exporters before the war, exporting about 1.8 million barrels per day (bpd), under UN supervision, from output of 2.5 million bpd.

The northern oil hub of Kirkuk has yet to be secured by US and British forces.

OPEC exporters, especially Saudi Arabia, have increased output in the past few months to cool prices that touched a 12-year high of $39.99 for US crude at the end of February.