RIYADH, May 16: US President George Bush pressed Saudi Arabia to raise oil output on Friday, but the world’s biggest crude exporter said supply is balanced with demand and market fundamentals are sound.

Bush arrived in Riyadh on the second stage of a Middle East tour and went straight into talks with King Abdullah as oil prices hit another record high.

“Clearly, the price of gas is too high for Americans, and it’s causing a hardship for many families of low income. But it also is not allowing our economy to grow as strong as it could,” White House spokeswoman Dana Perino told reporters aboard Air Force One which brought Bush from Israel to Riyadh.

“We do count on the Opec countries to keep adequate supplies out there. And so the president will talk again with the king about that,” she said before King Abdullah led a red-carpet welcome for Bush at Riyadh airport.

Oil prices surged above $127 per barrel on Friday.

But in a clear rebuke of Bush’s quest for a rise in production, Saudi Oil Minister Ali al-Nuaimi told reporters global oil supply is balanced with demand.

“Supply and demand are in balance today... The fundamentals are sound,” he said. However he did say that on May 10 “we increased our response to our customers by 300,000 barrels because they asked for it.” Nuaimi said additional demand came from about 50 customers, mostly US clients, “and we responded to it.” “Our production for June will be 9.45 million barrels per day,” he added.

The minister’s remarks were in line with Riyadh’s position that soaring prices are because of speculation rather than supply shortages.

Saudi Arabia would respond “favourably” if there were a shortage in supplies, Nuaimi said.

Ahead of Bush’s visit analysts had said the main Saudi concern was likely to be Washington’s failure to do more to advance the Middle East peace process, amid growing fears that the influence of Shiite Iran is soaring on the back of Arab frustration.Saudi Foreign Minister Prince Saud al-Faisal earlier told reporters that the Middle East peace process will be “discussed in depth” during Bush’s second visit to Riyadh since January.

The White House meanwhile announced major new cooperation agreements with Saudi Arabia on civil nuclear power and protecting the kingdom’s oil infrastructure which has come under attack by militants.—AFP