RIYADH (AFP) — US President George W. Bush pressed Saudi Arabia to raise oil output on Friday, but the world's biggest crude exporter said global supply is balanced with demand.
The OPEC kingpin revealed it had hiked production by 300,000 barrels per day this month, but both sides appeared to downplay the move.
National Security Adviser Stephen Hadley said that Riyadh told Washington the hike would not have a major impact on rocketing prices.
Bush arrived in Riyadh on the second stage of a Middle East tour and went straight into talks with King Abdullah as oil prices hit another record high. It was his second trip to the kingdom since January.
"Clearly, the price of gas is too high for Americans, and it's causing a hardship for many families of low income. But it also is not allowing our economy to grow as strong as it could," White House spokeswoman Dana Perino told reporters aboard Air Force One which brought Bush from Israel.
"We do count on the OPEC countries to keep adequate supplies out there. And so the president will talk again with the king about that," she said.
Oil prices rocketed near 128 dollars per barrel on Friday.
Saudi Oil Minister Ali al-Nuaimi said there was no need for a rise in output, relling reporters: "Supply and demand are in balance today... The fundamentals are sound."
However he did say that on May 10 "we increased our response to our customers by 300,000 barrels because they asked for it."
Nuaimi said the additional demand came from mostly US clients.
"Our production for June will be 9.45 million barrels per day," he added, and reiterated that soaring prices are caused by speculation rather than supply shortages.
Saudi Arabia would respond "favourably" if there were a supply shortage, he said.
Ahead of Bush's visit analysts had said the main Saudi concern was likely to be Washington's failure to do more to advance the Middle East peace process, amid growing fears that the influence of Shiite Iran is soaring on the back of Arab frustration.
In Israel Bush's visit was dominated by expressions of support on the 60th anniversary of the Jewish state's creation, with talks on the peace process relegated to the background.
Riyadh appears more concerned about Iran's increasing influence in the Arab world -- most recently demonstrated in the victory of its Hezbollah allies in Lebanon in clashes with supporters of the US-backed government -- in the face of perceived Western bias towards Israel.
"The kingdom believes that if Washington really wants to curb Iran's clout and role in the region it must work to resolve the Palestinian issue which Iran is exploiting to spread its influence," said Saudi political analyst Khalid al-Dakhil.
Saudi Foreign Minister Prince Saud al-Faisal said that King Abdullah would focus on the Middle East peace process during a second round of talks with Bush later on Friday.
"We all know the special nature of US-Israeli relations," Saud said. "But it is also important to underline the legitimate historic and political rights of the Palestinian people... which remain confiscated by the Israeli occupation."
Official Saudi media said the Palestinian problem, the Lebanon crisis and war-torn Iraq featured in a first round of talks between Abdullah and Bush.
The White House announced major new cooperation agreements with Saudi Arabia on civil nuclear power and protecting the kingdom's oil infrastructure which has come under attack by Islamist militants.
"The United States and Saudi Arabia have agreed to cooperate in safeguarding the kingdom's energy resources by protecting key infrastructure, enhancing Saudi border security, and meeting Saudi Arabia's expanding energy needs in an environmentally responsible manner," a White House statement said.
It said Washington and Riyadh would also sign an agreement on nuclear cooperation clearing the way for Saudi Arabia to receive enriched uranium for its reactors, without the need to master the fuel nuclear cycle itself as Iran has done.
Saud said the two countries signed "a memorandum of understanding on cooperation in nuclear energy."
He said the agreement on protecting oil infrastructure provides for cooperation in training and exchange of information, but only Saudis will guard oil facilities.
Bush is due in Egypt on Saturday on the third and last leg of his Middle East tour.
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