NEW YORK, AUG. 2 -- Iraq's invasion of Kuwait sent oil prices soaring and stock prices tumbling in nervous trading around the world today, as financial markets reacted to the possibility that Persian Gulf turmoil could cause a cutback in petroleum shipments from the region.

The dollar rallied and the price of gold jumped as investors flocked to put their money in "safe havens" protected from the twin threats of political uncertainty and oil-fueled inflation.

"It does appear that oil prices are going to be higher," said Mitchell Meisler, executive vice president in worldwide equity trading for Shearson Lehman Brothers Inc. "Obviously, we've set the stage for some pretty choppy markets."

Nevertheless, oil and financial analysts said they did not expect to see a repeat of the 1973 and 1979 energy crises, when oil prices increased altogether nearly 10-fold and Americans had to line up to buy gasoline.

A more modest economic impact is foreseen this time, compared with the earlier crunches, in part because U.S. oil inventories, or supplies in storage, are currently at their highest levels in eight years, the specialists said.

In addition, while financial markets remain very worried about the intentions of Iraqi leader Saddam Hussein, analysts said they believed he was interested in pushing up oil prices by only about 10 percent or so, rather than in causing them to double.

"We're only talking about an increase of a few dollars {a barrel} in the price of oil, not a doubling or tripling, so the magnitude of the response is likely to be far less severe than we saw before," said Franklin Kennedy, senior vice president and financial strategist at Equitable Capital Management Corp.

Crude oil prices rose by as much as $3 a barrel during the day to nearly $24 a barrel on world markets, although prices closed below their peaks owing in part to unconfirmed rumors that Iraq planned to withdraw its troops from Kuwait within 48 hours.

On the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in September closed at $23.11 a barrel, up $1.57 from the previous day's close but below the high for the day of $23.80. In London, on the so-called "spot" market where individual cargoes of crude oil are traded, the price of North Sea Brent blend, the most widely traded international crude oil, finished at $22.39 a barrel, up nearly $2 from Wednesday but down from its highs of the day.

In the past three weeks, the Iraqi-Kuwaiti confrontation has driven up free-market oil prices from less than $16 a barrel to more than $23 a barrel -- an increase of nearly 50 percent. So far, that jump has affected only the spot and futures markets. But the higher prices will soon drive up prices in long-term crude supply contracts as well, and the impact will quickly work its way through to consumers.

While oil supplies currently are plentiful, the markets are extremely nervous about the possibility that Iraq's appetite for military adventure may not be satisfied with the occupation of Kuwait alone.

"Hussein is doing a lot of things that are scary," said Michael D. Broder, a vice president for energy futures at Dean Witter Reynolds Inc. "I see extreme volatility and uncertainty" in the oil market in the days ahead, he said.

The prospect of higher oil prices, which would add to inflation, was the principal factor depressing prices on the New York Stock Exchange. The Dow Jones industrial average dropped 34.66 points, or 1.2 percent, to 2864.60 in the heaviest trading since last October's "mini-crash."

The market fell because higher oil prices were expected to slow down economic growth generally, and to force consumers to divert spending from discretionary purposes such as travel to pay higher bills for heating oil and gasoline.

Stocks that were particularly hard hit today included those in the aircraft and automobile industries, which are sensitive to fuel prices. In contrast, oil industry stocks rose sharply, and Chevron and Texaco were the two most heavily traded shares.

"You're seeing all of the typical effects of {Middle East} hostility: oil stocks rallying based on the geography of the situation, auto stocks and airline stocks selling off, and some of the chemicals selling off," said Shearson Lehman's Meisler.

The impact was even stronger in stock markets in Japan and Western Europe, both of which are more reliant on imported oil.

In Tokyo, the Nikkei index of 225 stocks plummeted 592.81 points, or 1.92 percent, to 30,245.18. In London, the Financial Times Share Index index of 100 stocks was down 34.5 points, or 1.5 percent, at 2304.5.

{In trading Friday in Tokyo, however, the Nikkei recovered about half of its losses earlier in the morning, the Associated Press reported. The Nikkei finished morning trading at 29,953.87, down 291.31 points, or 0.96 percent, from Thursday's close. The index shed 609.89 points in the first 30 minutes of trading.}

"The United States still imports only half of its oil. Our trading partners import substantially all of it. We're in a far better position than the Japanese or Germans," Equitable's Kennedy said.

America's relative advantage, compared with its principal trading partners, also was evident in the strength of the dollar, which rose sharply against the Japanese yen and reversed what had been a steady slide against the West German mark.

The dollar traditionally benefits from world political troubles, as investors shift funds to what is seen as the globe's safest currency. Today was no exception, as the dollar was up by as much as 4 West German marks and 3 Japanese yen in frenetic trading at times during the day.

The dollar lost some of its gains late in the day, however, and was quoted in late New York trading at 149.30 yen, up 2 yen from 147.30 a day earlier. The gain on the day against the mark was marginal, as the dollar was quoted at 1.5910 marks, compared with 1.5889 a day earlier.

Gold benefited because it is considered both a hedge against inflation and a refuge in times of political troubles. On the New York spot market, gold closed at $376.80 an ounce, up $3.50, and traders predicted that gold would remain volatile and on an upward price trend.

"It doesn't look like it'll calm down overnight, because we find that the Iraqi leadership is no more predictable than the Libyan leadership," said A. George Gero, a vice president and precious metals trader for Prudential-Bache Securities Inc.