Saudi Arabia, in its most conciliatory remarks since the Persian Gulf crisis erupted, has suggested Kuwait could make territorial concessions to Iraq.

Saudi Defense Minister Prince Sultan Ibn Abdulaziz said Arab countries were ready to grant Iraq "all its rights" but added that there was no question about its unconditional withdrawal from Kuwait.Saudi Arabia "sees no harm in any Arab country giving its Arab sister land, a site or a position on the sea," the prince told Arab journalists in Riyadh Sunday.

Soviet news reports say Iraqi President Saddam Hussein told a Soviet envoy he might be willing to withdraw if Iraq was allowed to keep Bubiyan and Warba islands and part of an oilfield along the disputed border. Iraq denied the report.

Prince Sultan said no time had been set for military action in the gulf. He urged "seeking peace through all means."

"The Arab countries are ready to give Iraq all its rights. Any Arab who has a claim on his brother should take it by understanding, not force," the Qatari News Agency quoted him as saying.

Egyptian President Hosni Mubarak flew to Saudi Arabia Monday and was to meet Saudi leaders. Egypt has contributed troops to the multinational force in Saudi Arabia.

Iraq, meanwhile, said drivers with Kuwaiti license plates will not get gasoline when rationing starts Tuesday unless they re-register their vehicles as Iraqi.

Newspapers Monday quoted Oil Minister Issam Abdul-Rahim al-Chalabi as saying foreigners in Iraq also would have to prove they had a valid reason for having cars if they wanted gasoline coupons.

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Gas prices spiral up

The price of a gallon of gasoline rose another 2 1/2 cents in the past two weeks, reaching a national average of $1.4709. That's an increase of more than 40 cents since Iraq's invasion of Kuwait on Aug. 2, according to the biweekly Lundberg Survey of 13,500 gas stations. The dealers' margin stands at about 11 cents a gallon, down 2 cents a gallon from before the crisis, analyst Trilby Lundberg said Sunday.