(Adds comment from energy expert, background)
WASHINGTON, June 14 U.S. President Barack Obama
spoke with Saudi Arabia's King Abdullah on Thursday amid
concerns about escalating violence in Syria and plans to widen
sanctions on Iran.
The White House gave no details of the conversation, but the
telephone discussion came as the Organization of the Petroleum
Exporting Countries agreed to hold production limits - despite
an initial Saudi suggestion that OPEC may need to hike output
later this year.
Washington is watching the oil markets closely and is also
concerned about escalating violence in Syria, where Saudi Arabia
has been an outspoken supporter of the opposition, which is
fighting the government of Syrian President Bashar al-Assad.
The call also came two weeks before tough new U.S. sanctions
on oil transactions with Iran come into force and before the
27-country EU plans to ban shipments from Iran, which the West
believes is trying to build nuclear weapons.
"The two leaders reaffirmed the strong and enduring
bilateral relationship between the United States and Saudi
Arabia, and discussed a range of issues of mutual interest as
part of their ongoing consultations," the White House said in a
short statement, which officials declined to expand upon.
Some analysts say the sanctions on Iran could boost global
oil prices next month after they fell steeply this spring.
Last month at a meeting Obama hosted at Camp David, the
Group of Eight nations signaled their readiness to tap into
emergency oil stockpiles if the sanctions threaten to strain
A Washington-based oil expert, who did not have direct
knowledge about Thursday's call, said Obama likely spoke with
King Abdullah about potential collective action by consumer
countries in the International Energy Agency to tap oil reserves
should tensions over Iran rise and oil prices spike.
"He probably wanted to check in on it and get the King's
blessing or at least commitment not to undo," any move by
consumer countries to tap reserves, the expert said.
Barring an unexpected last-minute deal to relax EU
sanctions, the Europe-based Protection and Indemnity clubs that
cover 95 percent of the world's oil tankers will be unable to
insure vessels carrying Iranian crude from July 1.
Analysts say this could blossom into one of the more
troubling aspects of the Iran sanctions for oil markets.
Analysts say the insurance gap could cut Iran's oil
shipments by even more than the 25 percent they have fallen
aleady due to sanctions. If that happens, oil prices could
reverse course and rise again.
Obama has cited high gasoline prices as one of the headwinds
holding back the U.S. economy, although energy costs have eased
from levels earlier in the year.
Saudi Arabia has played a role in taking the steam out of
the oil market, pumping crude at 10.1 million barrels per day in
recent months, the highest level in decades, which has helped
push U.S. oil prices down by about $20 to about $84 a barrel.
The price drop has troubled Saudi Arabia's fellow OPEC
members Iran and Iraq, who are urging the kingdom to cut
(Reporting by Alister Bull and Timothy Gardner; Editing by