GULF WATCH: Day 54 : A Daily Briefing Paper On Developments In The Crisis : Diplomatic Front:

As the U.N. Security Council prepared to tighten sanctions against Iraq by imposing an air traffic embargo, French President Francois Mitterrand proposed a four-point plan to settle the Middle East conflict. The plan calls for a U.N.-guaranteed Iraqi withdrawal from Kuwait and the release of all foreign nationals detained as hostages--ideas Iraq has previously rejected.

Iraq, meanwhile, announced it would boycott the U.N. General Assembly session because the United States denied landing rights for an Iraqi plane for Foreign Minister Tarik Aziz.

Diplomatic sources said Jordanian and Yemeni envoys expelled from Saudi Arabia this week were monitored photographing strategic oil, military and government installations and later meeting with Iraqi diplomats.

At the White House, spokesman Marlin Fitzwater characterized Saddam’s new threat to blow up oil fields in the Middle East as part of “a daily diatribe from Saddam.”

Military Front:

The West German government said it will deliver nearly $500 million worth of East German military equipment to the U.S. forces in the Persian Gulf. The equipment, part of a German aid package, is expected to include some Soviet-made equipment no longer needed by the dying East German army.

South Korea will contribute $220 million in cash, goods and services this year and next to support the multinational efforts against Iraq. The United States had asked for $350 million.

Meanwhile, President Hafez Assad of Syria extended his visit to Iran. He is believed to be urging Iran to take a tougher stand against archenemy Iraq. Syria has said that U.S.-dominated Western forces must leave the gulf once the crisis ends.

Economic Front:

Iraq’s veiled warning that it might launch war to retaliate against sanctions rattled oil markets, pushing prices to the highest level in a decade in London and to a record high in New York. The Tokyo exchange was closed for a holiday.

The prices skyrocketed despite new estimates showing that enough oil is being pumped to forestall, at least until winter, worldwide energy shortages. Analysts said the markets are moving on emotion and headlines. Nonetheless, oil prices caused stocks to plunge around the world.

Crisis Indicators:

* Crude for Nov. delivery, N.Y. Mercantile Exchange: $38.25 a barrel, a record

* North Sea crude, spot price: $40 a barrel

* Dow Jones Industrial Average: 2452.97 down 59.41

* Americans trapped in Kuwait: 600-700

* Americans trapped in Iraq: 300-350

* Americans rounded up, detained: 93

* Seriously ill Americans held: 69