May 16, 2008
RIYADH, Saudi Arabia — President Bush used a private visit to King Abdullah’s ranch here on Friday to make another appeal for an increase in oil production that might give American consumers some relief at the gasoline pump. The Saudis responded by announcing they had decided a week ago on a modest increase of 300,000 barrels a day.
The White House said the increase would not be enough to lower gasoline prices, which are nearing $4 a gallon, and industry analysts called it mostly symbolic.
But Mr. Bush’s request, his second in five months, coupled with rising anti-Saudi sentiment in the Democratic-led Congress, underscored the growing tensions between the countries over oil. The issue is also dominating the domestic agenda in Washington, where the Energy Department said Friday it was suspending shipments of oil to the strategic petroleum reserve.
Mr. Bush’s visit here was, in many respects, a reprise of a trip he made to the king’s ranch in January, when he asked for an increase in production and was rebuffed publicly by the oil minister and privately by the king. This time, the Saudis again resisted Mr. Bush, while offering at least the appearance of a concession.
The Saudi oil minister, Ali al-Naimi, told reporters that the kingdom had decided on May 10 to increase production, not in response to Mr. Bush but because customers, mostly in the United States, had asked for it. He said that over the last few months, as supplies from other countries had declined, the Saudis had filled in the gap.
"When supplies from Venezuela and Mexico were reduced to the U.S., who supplied the difference?" Mr. Naimi said. "We supplied, to the tune of an additional 300,000 barrels per day, from 1.4 to 1.7 million barrels per day, for our customers in the U.S. So how much more can we do?"
Both Mr. Naimi and Mr. Bush’s national security adviser, Stephen J. Hadley, said the Saudis had held fast to their longstanding position that they were willing to pump more oil, but only if refineries wanted to buy more. Mr. Naimi said the current supply was meeting demand.
Even so, Mr. Hadley said he had a sense that officials in the kingdom were concerned about sentiment in the United States.
"They are sensitive to the economic health of their customers," Mr. Hadley said. "And they are also sensitive to, and aware of, I’m sure, about the unhappiness that is generated in the United States among the American people and in the Congress about these high oil prices."
The White House billed the visit on Friday as a way to celebrate 75 years of United States-Saudi relations, but that relationship, while strong under past presidents, especially Mr. Bush’s father, has grown strained under this president.
Mr. Hadley told reporters recently that "the Iraq war was a stress" on the relationship. Jon Alterman, a Mideast expert at the Center for Strategic and International Studies, said Saudi confidence in the United States has been "extremely shaken," over the war as well as what Saudis perceive as Mr. Bush’s lackluster effort on behalf of the rights of Palestinians.
"They’ll be polite," Mr. Alterman said, "but they’re not really going to put themselves out to help this president."
Still, Mr. Bush had little choice but to try. In Washington, Congress voted this week to order the Bush administration to stop depositing oil in the national reserve. The White House initially opposed the move but then said it would comply, prompting the Energy Department’s announcement on Friday.
Meanwhile, Democrats are trying to use the issue to political advantage. Senator Charles E. Schumer of New York, for instance, is pressing to limit arms sales to the kingdom. In a statement on Friday, he asserted the Saudis have "the ability to increase production capacity by two million barrels a day right now," and said an increase in production of one million barrels would reduce the price of gasoline by 60 cents per gallon.
The Saudi government has long argued that high prices have been caused by a myriad of factors outside of their control, including a weak dollar and strong growth in demand from Asia, but not by a lack of oil in the market. Mr. Naimi reiterated that argument Friday, saying "supply and demand are in balance today."
But the overall picture has become more clouded in recent weeks as oil prices have risen quickly, and energy experts say that the Saudis are starting to worry that high prices will end up crimping demand.
"This is a recognition that there is a confluence of interest here, both on the producer side and on the consumer side," said Frank A. Verrastro, director of the Energy and National Security Program at the Center for Strategic and International Studies in Washington. "The Saudis are concerned that these higher prices might be leading to some demand destruction."
The International Energy Agency, which advises industrial countries, recently reduced its estimates for oil demand growth this year, with consumption expected to fall in the United States, Europe and Japan. But demand should still rise by one million barrels a day thanks to growth in China and the Middle East.
Global supplies have suffered from a series of shortfalls this year, including a strike by oil workers in Nigeria that reduced production there by nearly one million barrels a day, and shortfalls in Mexico’s output, which is suffering from a lack of investment.
But analysts doubted whether the modest increase in Saudi production would make any difference.
"It’s puzzling," said Roger Diwan, a managing director at PFC Energy, a consulting group in Washington. "This might bring a little bit of relief in the very short term, but I don’t think it will have any meaningful impact. I don’t see many American refiners clamoring for oil right now."
Jad Mouawad contributed reporting from New York.