White House welcomes Saudi oil output pledge

By Matt Spetalnick

WASHINGTON (Reuters) - The White House on Monday welcomed Saudi Arabia's pledge to increase oil output but sought to dampen any expectations that the move would do much to ease record U.S. gasoline prices.

"We certainly think that it's ... welcome that Saudi Arabia will further increase their production, but we also believe that the fundamental issue of supply and demand continues to rule on this predicament that we're in, in our country," White House spokeswoman Dana Perino told reporters.

Top exporter Saudi Arabia, hosting a weekend oil summit, confirmed it will lift production to 9.7 million barrels per day (bpd) in July, its highest in more than 30 years, and pledged on Sunday to pump even more if the market demanded it.

It detailed plans to boost capacity to 15 million bpd when future demand warrants the investment, in a bid to soothe growing fears that the world is running out of oil, but those measures failed to allay fears in an anxious market.

President George W. Bush in recent months has been pressing OPEC to do more to curb oil prices, even as pushes for an expansion of U.S. oil refining and exploration, including a call last week for Congress to end a decades-old ban on offshore oil drilling.

A jump in U.S. gas prices above $4 a gallon at the pump has stoked consumer anger and become a major issue in the campaign for the November presidential election to pick Bush's successor. Oil prices hit a peak of nearly $140 a barrel last week, a doubling in the past year.

Sunday's emergency meeting in Jeddah infused new urgency to the ongoing dialogue of major producers and consumers amid growing concern about record oil prices contributing to economic slowdowns in the United States and elsewhere.

"High energy prices are having an impact on the global economy, and that will have consequences for both oil producers and consumers," White House spokesman Tony Fratto said earlier.

Asked whether the White House believed the Saudi decision would help curb oil prices, Perino said, "We'll have to see."

Perino said Bush regarded the Saudi meeting as a "good and useful dialogue."

But asked whether the president was concerned that he did not get enough out of oil producers at the weekend conference, she said, "These countries are going to have to make their own decisions. You can't arm-twist them into doing anything, but we can ... take control of more of our destiny."

Perino acknowledged that speculators may be playing a role in rising oil prices but made clear that the Bush administration saw other factors with a stronger influence.

"The laws of supply and demand are the basic issue here," she said. "We do think that speculation can add day-to-day turbulence in the market, but that at the end of the day what we really need is more conservation."

Asked whether prices for U.S. consumers were likely to get worse before they get better, she said, "I'm not going to predict the market."

(Reporting by Matt Spetalnick, editing by Jackie Frank)