Bush unlikely to pressure Saudis on oil

By Chris Baltimore - Analysis

WASHINGTON (Reuters) - President George W. Bush is unlikely to complain about oil prices near $100 per barrel when he meets with Saudi Arabia's king next week, even though prices have nearly doubled since the last time the two met in 2005.

When he arrives in Riyadh on Monday, Bush would be well within his bounds to quiz the Saudis on how the de facto leaders of the OPEC cartel can tame oil prices that are an added blow to a U.S. economy tilting toward recession.

Saudi Arabia, the world's biggest oil exporter, produces about 9 million barrels per day and is in the midst of a major capacity boost aimed at relieving drum-tight global supply.

"Where are those 12.5 million barrels per day that their oil minister has been promising forever?" said Thomas Lippman, adjunct scholar at the Middle East Institute.

The day the former Texas oil man walked arm-in-arm with King Abdullah, then the Crown Prince, at Bush's Texas ranch in April 2005, oil cost around $54 a barrel, a level that Saudi officials admitted was "clearly too high."

With prices now near $93 a barrel, Bush is likely to focus on the Israeli-Palestinian peace process when the world's biggest oil consumer and its biggest exporter meet.

The oil issue will likely be left to U.S. Energy Secretary Sam Bodman when he visits Saudi Arabia later this month.

SPENDING THE MONEY

It's hard to criticize Saudi Arabia when it's spending about $50 billion to expand production capacity, said Frank Verrastro, an energy expert at the Center for Strategic and International Studies.

"The Saudis are the ones that are spending the money," Verrastro said. "It's kind of a weak case if you're going to try to blast them."

Saudi Arabia plays a vital role in the fragile U.S. oil supply chain.

For January-October 2007 -- the most current U.S. data -- it sent 1.422 million barrels per day to U.S. shores. That was bested only by Canada, and year after year it places among the top five U.S. suppliers, along with Mexico, Nigeria and Venezuela.

And while Mexico's crown jewel Cantarell oil field suffers from chronic declines and Nigeria's output has been dented by rebel attacks, Saudi Arabia has steadily held to its export commitments, experts said.

Bush would be "misinformed and ill-advised" to pressure the Saudis given their vital role, Lippman said at a Center for National Policy event.

The Saudis are already hard-pressed to find buyers for about 1 million barrels per day of lower-quality heavy oil which is not compatible with most refineries, Lippman said.