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Saudi pledge follows Bush call for oil price action
2008-01-15
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. He was in Saudi Arabia on the latest leg of a tour aimed at countering what he calls the "threat" from Iran and promoting his vision of Middle East peace. Crude prices soared to 100 dollars a barrel at the start of the year, piling pressure on the US economy which has become a key issue in the campaign for the November presidential election. Bush's visit to Riyadh coincided with a State Department announcement 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. 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 United States is strengthening our longstanding security commitments with our friends in the Gulf -- and rallying friends around the world to confront this danger before it is too late," he said in a keynote speech in the United Arab Emirates on Sunday. But diplomats said Bush was faced with "difficult talks" in Saudi Arabia which, like other Gulf states, is determined to avoid further conflict in the region after the US-led invasion of Iraq of 2003. Bush and his personal friend King Abdullah held dinner talks Monday at the opulent Riyadh palace on efforts to reach a peace deal and create a Palestinian state, as well as the Iraq situation, the official SPA news agency said. US Secretary of State Condoleezza Rice broke away from the tour with Bush to make a surprise visit to Baghdad to press Iraqi leaders for further political reconciliation and legislative reforms. Tuesday's talks between Bush and Abdullah 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. White House spokeswoman Dana Perino told journalists that Bush has however said "he does believe that this problem can be solved diplomatically." But an editorial in the Saudi Arab News criticised Bush for his continued "sabre-rattling." "To continue such dire warnings was inconsiderate given that Bush was the guest of Gulf states which are on Iran's doorstep. Such warnings were not what we wanted to hear," it said. "Bush's inflammatory threats against Iran ride roughshod over the counsels of peace that he has heard from every Arab government on his Middle East visit. "He offers no carrot, no inducement, no compromise -- only the big US stick. This is not diplomacy in search of peace. It is madness in search of war." SPA said Bush and the king also discussed "international efforts to fight terrorism in all its forms." Washington believes that Saudi Arabia -- the homeland of Al-Qaeda chief Osama bin Laden and 15 of the 19 hijackers involved the September 11 attacks in 2001 -- still has "more to do" in battling extremism.
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