Oil prices surged to their highest level since the end of the Persian Gulf War yesterday after Iraq suspended oil exports, throwing already nervous oil markets into a turmoil that analysts said may send prices higher than $30 a barrel.

Stable oil prices have been the norm for much of this decade and have been one of the fundamental factors underlying the United States' longest-ever economic expansion. But oil prices have swung sharply in the past year and closed yesterday above $27 a barrel in trading on financial markets, compared with a 12-year low of just under $11 last December.

"The best inflation news is behind us," said Cynthia M. Latta, DRI-McGraw Hill's principal U.S. economist. She noted that low energy prices have insulated the U.S. economy from other price pressures during the long economic boom, helping to dampen overall inflation.

Oil industry analysts said the cancellation of Iraqi sales could push prices higher in the coming weeks. Latta said those higher energy costs could slow the U.S. economy and add to inflation pressures, though how much depends on how long the price spike lasts. Transportation fuel costs already have increased substantially, she said, although not all of the increase has been passed on yet in the prices of goods and services.

The Labor Department reported last week that so far this year, prices of gasoline and home heating oil have increased at a 30.9 percent annual pace. Gerald D. Cohen, an economist at Merrill Lynch & Co., noted that airline fares jumped by 5.3 percent last month, but he added that fare prices are volatile and had fallen sharply in the previous two months.

Trilby Lundberg, publisher of the Lundberg Survey of gasoline costs, said gasoline prices increased 2.5 cents over the past two weeks to reach a nationwide average price of $1.2774 for self-serve regular. If oil prices were to climb to $30 a barrel, the price could increase by an additional 8 cents per gallon, she said.

Rising oil prices hit more broadly than just at the pump. Petroleum makes up a quarter of the cost of many plastic bags, half the cost of certain fertilizers and 5 percent of the cost of nylon. Manufacturers consume oil in big gulps to produce an array of products.

Oil experts said yesterday that Iraq's decision to cut off supply comes at a time when oil-producing countries are enjoying increased leverage. Global demand for oil is increasing now that several Asian economies are rebounding from last year's crisis and production cutbacks orchestrated by the Organization of Petroleum Exporting Countries are sticking. Yesterday the January-delivery contract for light, sweet crude climbed as high as $27.20 before closing at $27.07.

"If you basically have no Iraqi oil for two to three weeks, you have a major problem in the oil markets," said Roger Diwan, managing director for markets and countries for the Petroleum Finance Corp., an industry consulting and research firm.

Iraq has been exporting 2.2 million barrels of crude oil per day, or about 3 percent of total global supplies.

OPEC members had been debating whether to extend production cuts beyond March 30, out of concern that higher oil prices at some point might diminish demand, but more recently indicated a willingness to keep the cutbacks in place until June.

"What better time to squeeze the market than when inventories have been drawn down and OPEC is creating all kinds of uncertainty?" said Philip K. Verleger Jr., an oil industry consultant.

Iraq canceled its exports after rejecting a two-week extension of the United Nations program that allows Iraq to sell limited quantities of crude oil to buy food and medicine. The program, which has been extended six times previously for 180 days at a time, expired on Sunday.

Members of the U.N. Security Council had been seeking a broader agreement with Iraq but weren't able to reach an agreement by the time the oil export agreement expired.

Diplomats said Baghdad appeared to be trying to put pressure on the Security Council to ease the sanctions. But they also said they expect Iraq, the world's second-largest oil exporter, to resume the sale of more than 2 million barrels of oil a day in two weeks.

U.N. officials said the decision will have virtually no immediate impact on deliveries of humanitarian assistance to Iraq. More than $2 billion worth of goods, including spare parts for the oil industry, have been approved for delivery to Iraq. And there is $2 billion more in the U.N. account used to buy humanitarian goods.

U.S. Secretary of State Madeleine K. Albright said today that Baghdad's action was a "cynical" ploy to use the people of Iraq to extract political advantages from the council.

Ann-Louise Hittle, director of world oil for Cambridge Energy Research Associates, said the balance between supply and demand was sufficiently tight that just the uncertainty over how long Iraq may be out of the market is enough to raise prices. In the fourth quarter, supply is expected to be 75.1 million barrels a day, with demand of 77.4 million barrels a day.

Where prices end up will depend not just on how long Iraq stays out of the market and what OPEC decides to do in response but also on the winter weather and on whether any supply glitches develop at the end of the year as a result of year 2000 problems.

Special correspondent Colum Lynch contributed to this report from New York.

CAPTION: ON THE UPSWING (This chart was not available)

CAPTION: Oil rose 93 cents a barrel yesterday to $27.07 on New York Mercantile Exchange.