ABU DHABI - The Global Oil Market Perspective.

Oil prices have been above $30/b since the unrest in Venezuela escalated last month. Should the situation in Venezuela continue to deteriorate and if the US attacks Iraq, then a push above $40/b in late February could be possible. But if the US taps into its 600m-barrel strategic reserve, prices

US Secretary of State Colin Powell on Dec. 29 began laying out America's vision for a post-Saddam Iraq, saying the Bush administration was planning for representative government that would use Iraqi oil money to "benefit the people of Iraq".

Speaking on the CBS TV programme Face the Nation, Powell said the Bush administration was spending "a great deal of time" planning for what would be needed to administer Iraq if Saddam was deposed in an invasion. He added: "We would want to put in place with the international community a government representative of the Iraqi people and use the wealth of the Iraqi people for their own benefit and not for the development of weapons of mass destruction".

The US has begun its much-anticipated build-up of forces in the region. Saudi Arabia has reportedly told the Pentagon it would allow its air bases and airspace to be used for an attack.

The US military has an alternate air command centre at Al Udeid Air Base in Qatar, just a few miles from the Central Command headquarters at Camp As Sayliyah where Gen. Tommy R. Franks, commander of American forces in the Middle East, would direct at least the early phases of any war. The US and Britain are stationing dozens of aircraft at a necklace of bases in the Persian Gulf, including Kuwait, Qatar and Oman. American officials are negotiating with Turkey for use of several bases there and plan to station B-2 stealth bombers overseas for the first time, at Britain's Diego Garcia base in the Indian Ocean.

Two aircraft carrier battle groups, each with about 10,000 sailors and marines, are within striking distance of Iraq. Two others were ordered recently to prepare for departure on 96 hours notice, as were two amphibious warfare groups. The US Navy has accelerated training schedules for other warships. Additional military personnel are heading for Kuwait, Saudi Arabia, Qatar, Oman and Bahrain, among other locations. The official Iraqi army newspaper Al-Qadissiya said in an editorial on Dec. 28: "The beating of war drums, the noise of weapons, the sending of warships, the mobilising of armies will neither frighten nor terrorise the Iraqis".

With a scandal chipping away at his Likud government before elections set for Jan. 28, Israeli Prime Minister Ariel Sharon is concentrating on Iraq and has found the Israelis eager to listen. He has made a series of remarks raising the specter of war and Israel's preparations for it. He asserted that Saddam's government was hiding chemical and biological weapons in Syria and that Al Qaeda had infiltrated the Gaza Strip. But he offered no evidence for his claims, and nothing emerged to substantiate them. A visit to Washington by his Defence Minister Shaul Mofaz spurred the Israeli press to theorise on the war in Iraq.

The Bush administration has also stepped up its rhetoric about the need for a democratic transformation in the Middle East. In the past several weeks Powell, CIA Director George Tenet and the State Department's director of policy planning Richard Haass have delivered major speeches underlining the "democracy gap" between the Arab Middle East and the rest of the world and stipulating that closing it is an essential part of the US-led war on terrorism.

On Dec. 28, Petroleos de Venezuela President Al!yRodr!guez said Venezuela will raise oil output by end-January to two-thirds of the amount it was producing before a national strike began last month. But local analysts say it will take several months to restart fields abandoned and neglected oil production plants and refineries. Only one of three refineries in the country is operating - the plant at Puerto La Cruz which is running at 60,000 b/d of gasoline and other products, compared with 130,000 b/d before the strike. Damage to vital oil installations can be serious.

The strikers want President Hugo Ch vez out. Tens of thousands of opponents keep marching and demanding that he resign. But Ch vez has said he was loved so much by his people that he will stay in power.