The correct option is A cut off the oxygen supply
In order for a fire to burn, all three elements must be present: heat, fuel and oxygen. If any of the elements are cut off the fire will be put out.
As blanket completely surrounds the person, it seals the person’s body surface around the fire and cuts off the oxygen supply to the fire, thereby putting it out. Hence, blanket acts as a fire extinguisher and stops the fire from spreading.