Oil has rallied almost ten per cent this week, sweeping prices off a 12-year floor in one of the most devastating oil price slumps in decades.

New York Mercantile Exchange (NYMEX) January crude futures rallied 83 cents to $12.38 per barrel during New York trading yesterday in anticipation of the attacks on Iraq because of Baghdad's failure to fully cooperate with the United Nations special commission weapons inspections.

The air attacks came after the end of New York trading, but prompted another 24-cent rally on access. But by 0440 gmt, January crude futures were last traded at $12.46 per barrel up by eight cents from the New York close, but off a peak price of $12.62.

February was quoted at $11.36/11.58 per barrel, up from London's close of $11.36. Traders said they started cashing in profits in the belief that Iraq supply would continue and that the attackswould be short-lived.

"In all likeihood, Iraqi exports will continue," one US broker said. "We are not bombing their oil facilities and we are not looking to limit their ability to export oil."

In addition, traders said they would not expect the U.S. and Britain to continue the bombing raids into the moslem fasting month of Ramadan due to start this weekend for fear of a backlash from Arab allies in the middle east.

"Their mission is to attack Iraq's nuclear, chemical and biological weapons programmes and its military capacity to threaten its neighbours," president Clinton said.

Before the attacks began, iraq's ambassador to the United Nations, Nizar Hamdoon, said oil exports would have to stop if military strikes were launched.

"Physically speaking, practically speaking, if there is a military strike, there will be no oil pumped," Hamdoon said.

Iraq currently exports some 1.8 million BPD. However, there was no indication so far today that the loading of oil tankers had been halted.

Taiwan'sstate-owned Chinese Petroleum Corp (CPC) said its crude tanker Isabela was waiting outside the Iraqi Mina Al-Bakr port for a scheduled December 20-21 loading.

"Before we receive any further instruction on what to do, we will hold to our plan to load the crude," a CPC executive said.

The air attacks were sparked by an unscom report showing Iraq had failed to fully cooperate with weapons inspectors. Iraq previously curtailed inspections on october 31 but allowed them to resume on November 17 under the threat of air strikes from the United States and Britain.