Saudi Arabia rebuffs Bush on oil production

Associated Press
Friday, May 16, 2008

The White House said Friday that Saudi Arabia's leaders are making clear they see no reason to increase oil production until customers demand it.

President Bush was in the oil-rich country to appeal to King Abdullah for greater production to help halt rising gas prices in the United States.

But his national security adviser, Stephen Hadley, said Saudi officials stuck to their position that they already are meeting demand.

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Hadley told reporters, "What they're saying to us is ... Saudi Arabia does not have customers that are making requests for oil that they are not able to satisfy."

When Bush met Abdullah in mid-January, the president also asked Saudi Arabia to raise production to ease high prices at the pump. But he got a chilly response to that plea. The kingdom said it would increase production only when the market justified it, and that production levels appeared normal.

Oil prices climbed to a new high Friday, above $127 a barrel. At the pump, gas prices rose to a national average of $3.78 per gallon, according to a survey of stations by AAA and the Oil Price Information Service.

Out of public view When Air Force One landed in the Saudi capital, the president got a red carpet welcome on the tarmac and was warmly greeted by Saudi leaders as a military band played the U.S. national anthem, slightly off-key.

Bush was spending the day with Abdullah at his horse farm outside Riyadh, talking mostly out of public view over three tea services and two meals.

The White House says the president's visit is intended, in part, to celebrate 75 years of formal U.S.-Saudi relations. It will mark the conclusion of several agreements, laying out intentions to cooperate on nuclear energy, infrastructure protection and nonproliferation. But the rising price of oil overshadowed the talks.

Bush acknowledges that raising output is difficult because the demand for oil — particularly from China and India — is stretching supplies. Besides, any production hike might not lower prices that much. Some economists say those prices are being driven up by increased demand, not slowed production.

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