By Maya Gebeily and Timour Azhari
DAMASCUS (Reuters) -Ousted Syrian President Bashar al-Assad's prime minister said he had agreed on Monday to hand power to the rebel-led Salvation Government, a day after the rebels seized the capital Damascus and Assad fled to Russia.
The imminent transfer of power follows 13 years of civil war and the end to more than 50 years of brutal rule by the Assad family, leaving Syrians at home and millions of refugees abroad hopeful yet deeply uncertain about their country's future.
Oil prices rose more than 1% on Monday, partly on concerns that uncertainty in Syria, which is not a major oil producer, could raise regional instability, analysts said.
Damascus stirred to life on Monday, with traffic returning to streets and people venturing out after a nighttime curfew, but most shops remained shut.
Fighters from the remote countryside milled about in the capital, clustering in the central Umayyad Square.
"We had a purpose and a goal and now we are done with it. We want the state and security forces to be in charge," said Firdous Omar, who said he had battled the Assad government since 2011 and now looked forward to resuming work as a farmer in provincial Idlib.
Assad's prime minister, Mohammed Jalali, told Al Arabiya TV he had agreed to hand power to the Salvation Government, an administration based in rebel-held territory in northwest Syria.
He said the handover could take days to carry out.
The main rebel commander Ahmed al-Sharaa, better known as Abu Mohammed al-Golani, met overnight with Jalali and Vice President Faisal Mekdad to discuss a transitional government, a source familiar with the discussions told Reuters. Golani has vowed to rebuild Syria.
Al Jazeera television reported the transitional authority would be headed by Mohamed al-Bashir, who ran the Salvation Government before the 12-day lightning offensive swept into Damascus.
The advance of a militia alliance spearheaded by Hayat Tahrir al-Sham, a former al-Qaeda affiliate, was a generational turning point for the Middle East.
The rebel sweep ends a war that killed hundreds of thousands, caused one of the biggest refugee crises of modern times and left cities bombed to rubble, countryside depopulated and the economy hollowed out by global sanctions.
QATAR OPENS CONTACTS
Assad's police state was known as one of the harshest in the Middle East, holding hundreds of thousands of political prisoners. On Sunday, elated inmates poured out of jails.
Refugees could finally go home from camps across Turkey, Lebanon and Jordan. European countries put Syrians' asylum applications on hold pending greater clarity on the situation in Damascus.
Regional governments including Iran scrambled on Monday to forge new links with the insurgents. Qatar opened contacts with HTS and planned to speak with Bashir on Tuesday, an official told Reuters.
The U.S. has been in communication with Syrian groups including through intermediaries, the State Department said.
The Arab world faces the task of reintegrating one of the Middle East's pivotal states, while containing the militant Sunni Islam that has in the past metastasized into the sectarian violence of Islamic State.
Highlighting the fluidity of Syria's political situation, U.S. Secretary of State Antony Blinken on Monday predicted Islamic State would try to re-establish its capabilities in the country during the transition.
But he said the U.S. was determined not to let that happen, citing U.S. strikes on about 75 Islamic State targets in central Syria on Sunday.
HTS is still designated as a terrorist organization by many states and the UN, although the UK said it could consider lifting the label. The group has spent years trying to soften its image to reassure foreign nations and minority groups within Syria.
SAUDI ARABIA SAYS ISRAEL UNDERMINES SYRIA
One of the last areas to fall to the insurgents was the Mediterranean coast, heartland of Assad's Alawite sect and site of Russia's naval base. Two Alawite residents said so far the situation had been better than expected, seemingly without retribution against Alawites.
Near Latakia, a rebel delegation met with elders in the Assad family's hometown of Qardaha, and the Alawites signed a statement of support for the rebels, three residents told Reuters.
Assad's fall wipes out one of the main bastions from which Iran and Russia wielded regional power. Turkey, long aligned with Assad's foes, emerges strengthened.
Israel said Assad's fall was a direct consequence of Israel's punishing assault on Iran's Lebanese allies Hezbollah, who had propped up Assad for years.
Since rebels entered Damascus, Israel has struck sites in Syria including bombing at least three major Syrian army air bases on Monday. Israeli officials said those airstrikes would carry on for days to keep Assad's former arsenal of heavy weapons out of hostile hands.
Saudi Arabia said Israel's seizure of a buffer zone in the Golan Heights would "ruin Syria's chances of restoring security."
But Israel told the U.N. Security Council that it was not intervening in Syria's conflict and had taken "limited and temporary measures" solely to protect its security.
The Kremlin said it was too early to know the future of Russia's military bases in Syria. Russian news agencies reported that rebel leaders had guaranteed the safety of those bases.