Watch CBSN Live

Saudis Rebuff Bush As Oil Hits New High

President Bush's second stab this year at getting oil-rich Saudi Arabia to increase production and drive down the soaring gasoline prices hurting U.S. consumers appears to have again failed.

Saudi Arabian leaders made clear Friday they see no reason to increase oil production until their customers demand it, apparently rebuffing Mr. Bush, the White House said.

During Mr. Bush's second personal appeal this year to King Abdullah, Saudi officials stuck to their position that they are already meeting demand, the president's national security adviser 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," Stephen Hadley said on a day when oil prices topped $127 a barrel, a record high.

The Saudi government indicated that it is willing to put on the market whatever oil is necessary to meet the demand of its customers, Hadley said.

But even then, he said, Saudi leaders say increased production would not dramatically reduce pump prices in the United States.

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

The president said he'd ask again for more oil, but he and the king are much more likely to talk about Iran, CBS News senior White House correspondent Bill Plante reports. The Saudis share a real concern over Iran's nuclear ambitions and they wish the U.S. would do something about it.

When Air Force One landed in the Saudi capital on Friday for his one-day visit, 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.

Mr. 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 undoubtedly will overshadow the talks.

Mr. Bush concedes 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.

Mr. Bush's visit to Saudi Arabia, which has the world's largest supply of oil, comes a day after Congress voted to temporarily halt daily shipments of 70,000 barrels of oil to the nation's emergency reserve. Mr. Bush has refused to stop pouring oil into the Strategic Petroleum Reserve, saying the stockpile was meant for emergencies and that halting the shipments would have little or no impact on gasoline or crude oil prices.

It's a move that Democrats have sought for the past year to increase supply and apply downward pressure on prices. With an eye to the November election, the Senate sent the measure to the president Wednesday night without a single GOP objection. The White House has indicated that Mr. Bush will sign the reserve measure.

Also, as Mr. Bush prepared to leave Washington, Senate Democrats introduced a resolution that would block $1.4 billion in arms sales to Saudi Arabia unless Riyadh agrees to increase its oil production by 1 million barrels per day. The Democrats said they introduced the measure to coincide with Mr. Bush's trip to send a message to Saudi Arabia that it should pump more oil to reduce the cost of gas for Americans.

High energy costs are a major drain on the U.S. economy, which is experiencing a slowdown that some think is already a recession. Oil prices are nearly $125 a barrel and gasoline threatens to go to $4 a gallon this summer.

Anthony Cordesman, a security analyst for the Center for Strategic and International Studies, said Abdullah may produce something "simply because it's good manners," but nothing that would have a significant effect.

"U.S. influence over OPEC and Gulf oil production is diminished," he said. "It's not clear what the incentive is to Saudi Arabia. We can't deliver on (Mideast) peace. We can't deliver on arms transfers. We can't deliver on the Iraq that Saudi Arabia wants. We are raising problems in terms of Iran. And the reality is the market isn't being driven by us; it's being driven by China, by India, by rising Asian demand."

Jon Alterman, director of the CSIS' Middle East program, said the Saudis, with a public that doesn't like Mr. Bush and a ruling monarchy with growing interests elsewhere, are not likely "to put themselves out to help this president."

"The Saudis don't have an alternative to keeping the U.S. in its corner, but their reliance on the United States, their confidence in the United States is extremely shaken," Alterman said.

Besides wanting to discuss oil, Mr. Bush is paying his second visit to Abdullah this year - on top of a stop by Vice President Dick Cheney in Saudi Arabia in March - to talk about his goal of achieving an Israeli-Palestinian peace deal before he leaves office. Saudi Arabia's immense power in the region means that its backing of Palestinian President Mahmoud Abbas and any concessions he will have to make is key.

The Saudi-American relationship began in the 1940s with a simple bargain: Saudi Arabia offered oil in return for U.S. protection. The United States became the kingdom's biggest trading partner and the Saudis became the biggest buyers of U.S. weapons. Many Saudis sent their children to American schools.

But over the years, issues arose.

Saudis, like other Arabs, feel Washington leans unfairly to Israel's side in the dispute with the Palestinians.

And Saudi-U.S. ties took their hardest hit after the Sept. 11, 2001, attacks, in which 15 the 19 airline hijackers were Saudis. Americans blamed Saudis for allowing the religious extremism that gave rise to the hijackers. Though anti-terror cooperation has been relatively strong since, Saudis still smart from what they feel are unfair accusations.