RIYADH (AFP) — US President George W. Bush urged oil producers on Tuesday to take action over near record-high prices, prompting his Saudi hosts to vow to increase output when justified by the market.
Bush, facing recession fears at home after prices surged to a record 100 dollars at the start of the year, raised the sensitive issue on the second day of a visit to OPEC kingpin Saudi Arabia -- the world's largest oil producer.
He said he planned to discuss with King Abdullah "the fact that oil prices are very high, which is tough on our economy."
"And that I would hope, as OPEC considers different production levels, that they understand that if their -- one of their biggest consumers' economy suffers -- it will mean less purchases, less oil and gas sold."
OPEC is due to meet in Vienna on February 1 under pressure to calm prices after shrugging off calls to increase output at its last meeting in December.
And Saudi Arabia's Oil Minister Ali al-Nuaimi later announced: "We will raise production when the market justifies it, this is our policy."
Bush's warning had an instant impact on world oil prices, with New York's main contract, light sweet crude for delivery in February, slipping 10 cents to 94.10 dollars per barrel.
His comments came a day after his administration said it was taking the first steps in a multi-billion-dollar arms deal with the kingdom, a key US ally in the volatile region.
But Bush faced difficulty in convincing his Saudi hosts to wholeheartedly support the twin pillars of his Middle East tour -- greater backing from Arab states for the revived Middle East peace process and a willingness to confront the "threat" of Iran.
Saudi Foreign Minister Saud al-Faisal gave a cool response to Bush's request, made in Jerusalem last week, that Arab countries "reach out" to Israel to boost the revived Middle East peace talks.
"I don't know what more outreach we can give to the Israelis," the minister told a press conference with US Secretary of State Condoleezza Rice.
Faisal, speaking through an interpreter, also said Saudi Arabia had "nothing bad" against its powerful neighbour Iran.
"Iran is a neighbouring country, an important country in the region. Naturally we have nothing bad against Iran."
Saudi Arabia, like other Gulf states, is determined to avoid further conflict in the region after the US-led invasion of Iraq of 2003.
Earlier, Bush told journalists in Riyadh he had asked King Abdullah and other Gulf leaders to do more to confront Iran.
"They need to help. They need to make it clear to nations that do business with Iran that if we want to solve this diplomatically, there needs to be pressure on the regime ... the hope is that somebody shows up and says, 'we're tired of being isolated and we're tired of the economic deprivation that comes with our desire to enrich.'"
Sweetening Bush's visit to Riyadh, the State Department announced that his administration has notified Congress of its intention to sell 900 satellite-guided bombs to Saudi Arabia for 120 million dollars.
The weapons are the first part of a planned 20-billion-dollar deal with the Gulf announced in July, and the notification begins a 30-day period for Congress to raise objections.
The Bush administration says the Saudi deal is needed to counter Iran.
Speaking in Riyadh to a pool of journalists travelling with him, Bush reiterated his threat that Iran would face "serious consequences" if it should "hit" or "destroy" American ships, following a naval incident in the Strait of Hormuz earlier this month.
Bush has made clear that what he calls the threat posed by "the world's leading state sponsor of terror" is top of the agenda of his week-long Middle East tour.
The penultimate day of Bush's Middle East tour coincided with a bomb attack in Beirut on a US embassy vehicle that killed at least three people, but no Americans.
Secretary of State Condoleezza Rice expressed "outrage" at the attack, saying the US would not be deterred by "intimidation" in its efforts to help democratic forces in Lebanon "resist foreign interference in their affairs".
The main thrust of Bush's eight-day visit to the region, which ends in Egypt on Wednesday, was to bolster revived peace talks between Israel and the Palestinians.
But despite his confident prediction in Jerusalem last week of a signed peace treaty within a year, the conflict suffered its deadliest single day of violence in 12 months Tuesday when Israeli troops killed 19 Palestinians in the Gaza Strip.
The fighting broke out a day after top Israeli and Palestinian negotiators began talks on core issues of their conflict.
Palestinian president Mahmud Abbas branded the Gaza operation a "massacre," and said it flew in the face of peace efforts.
Tuesday's talks between Bush and Abdullah, which follow dinner talks on Monday, were being held at the king's ranch in Janadriyah outside Riyadh, where even the stables for his thoroughbred horses are air-conditioned.
Riyadh has called for restraint in the standoff between Tehran and Washington amid fears among US-allied Gulf states of military action to stop Iran's controversial weapons programme.
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