Citing Prices, Bush Urges OPEC to Boost Output

By Michael Abramowitz
Washington Post Staff Writer
Wednesday, January 16, 2008

RIYADH, Saudi Arabia, Jan. 15 -- With oil prices hovering around $90 a barrel, President Bush on Tuesday urged oil-rich countries to raise their output, but Saudi Arabia's oil minister said the world's largest producer would do so only "when the market justifies it."

After a week-long trip in the Middle East that has focused largely on Israeli-Palestinian peace and Iran's regional ambitions, the president pivoted sharply Tuesday to the rising price of oil. He said he planned to raise the subject in his conversations late Tuesday with Saudi King Abdullah at his ornate country estate near Riyadh.

"I would hope, as OPEC considers different production levels, that they understand that if . . . one of their biggest consumers' economy suffers, it will mean less purchases, less oil and gas sold," Bush told reporters here, referring to the Organization of the Petroleum Exporting Countries.

On Monday, his aides said they did not know whether the subject would come up in the president's talks with Abdullah. But Tuesday, the White House made oil a centerpiece of its public communication in the capital of the world's biggest oil producer, and Bush made clear his concern that the sharp increase in prices was a threat to the U.S. economy.

"It could cause this economy to slow down," Bush told reporters in a roundtable interview at the king's guest palace here.

"There is not a lot of excess capacity in the marketplace," Bush said. "What's happened is, is that demand for energy has outstripped new supply. And that's why there's high price."

Speaking coincidentally after Bush's impromptu news conference, Saudi Oil Minister Ali al-Naimi said the president raised valid concerns about the impact on the U.S. economy, but he seemed to suggest there were limits to what the Saudis would do. "We will raise production when the market justifies it," he said.

Saudi officials have long worried that high oil prices could shrink demand for oil, but the world's thirst has continued to increase despite a more than tripling in prices since 2002. With high prices, money is pouring into oil-producing countries, including Saudi Arabia, whose oil revenue last year reached about $200 billion. According to a Platts survey of OPEC and industry officials, Saudi Arabia is currently producing a little over 9 million barrels a day, about 2 million barrels a day less than its capacity.

Bush had a full day in Saudi Arabia that began with him dispatching Secretary of State Condoleezza Rice to Baghdad for an unannounced visit with Prime Minister Nouri al-Maliki. Bush spent the morning with young Saudi entrepreneurs and visited a palace here that now serves as the museum of national history.

He later traveled to the estate near Riyadh that the king uses to entertain favored guests and raise Arabian stallions -- something of a return invitation by Abdullah for two visits he made to the president's ranch in Crawford, Tex., when he was crown prince. Bush and his aides donned fur-lined, full-length Saudi robes for the lavish dinner Tuesday evening at the so-called horse farm, and the president appeared pleased.

Both Bush and Saudi officials made clear that a big focus of their conversations this week has been the Israeli-Palestinian peace talks that Bush helped launch, as the king had pressed him for years to do. Bush said Abdullah wanted to know why he was so optimistic about the peace process, and Bush said he told the king that one reason previous talks had failed was that Arab neighbors had not been sufficiently supportive.

At a news conference later Tuesday evening in Riyadh, Saudi Foreign Minister Prince Saud al-Faisal seemed to gently rebuff the president's pleas this week for Arab countries to do more to reach out to Israel, noting that the Saudis have already put forward a peace plan that would include normalization of ties with Israel.

"I don't know what more outreach we can give to the Israelis," he said.

Bush said another subject in talks with the Saudis was the recent National Intelligence Estimate concluding that Iran had halted its nuclear weapons program in 2003. The report startled officials in Saudi Arabia and elsewhere, who presumed that the administration no longer viewed Iran with the same alarm. The president said he tried to disabuse his hosts of this notion and seemed to distance himself a little from his intelligence agencies.

"I defended our intelligence services but made it clear that they're an independent agency, that they come to conclusions separate from what I may or may not want," Bush said.

Staff writer Steven Mufson in Washington contributed to this report.

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