Bush gets oil but no credit for jawboning Saudis

By Chris Baltimore - Analysis

WASHINGTON (Reuters) - President George W. Bush walked away from a meeting with Saudi King Abdullah on Friday with a prize he has been seeking for months: a commitment from the world's big oil exporter to boost output.

But the news -- which came the same day that U.S. crude oil futures hit a new record of $127.82 a barrel -- speaks less to Bush's success at "jawboning" the de facto OPEC leader on oil prices and more to the kingdom's worry that high oil prices will dent demand for their own supplies, analysts said.

Saudi Arabia move to boost output by a modest 300,000 barrels per day, or 3.3 percent, in an attempt to head off an oil price shockwave that is disrupting the global economy, experts said.

"It's not that Bush went to Saudi Arabia and they gave him something," said Amy Myers Jaffe, an energy researcher at the Baker Institute at Rice University in Houston.

"It is in the Saudis' interest to respond to the risks that they see both in the oil market and the financial market," Jaffe said.

The Saudis are seeking to salvage the value of the U.S. dollar, which comprises most of the kingdom's foreign currency holdings, Jaffe added.

The move, announced by Saudi Oil Minister Ali al-Naimi after Bush met with Abdullah in Riyadh, was "a bit of capitulation for the Saudis," said Frank Verrastro, an energy expert at the Center for Strategic and International Studies.

However, Verrastro agreed that the move was meant to safeguard global economies and prevent a downturn in petroleum demand, not to placate the world's largest energy user.