Futures & Commodities

Cheney, Saudi King Discuss Ways to Calm Oil Market


U.S. Vice President Dick Cheney on Friday met Saudi Arabia's King Abdullah for talks that will
include discussions on cooperation to stabilise the oil market, where prices have reached record highs.

"I'm sure they will talk about the need for a cooperative way forward to try and stabilise this market, reduce the volatility in the market, and serve the interests of both consumers and producers alike," John Hannah, national security adviser to Cheney, told reporters.

Oil Refinery

Oil prices have risen in recent weeks to record highs above $100 a barrel because investors have piled into commodities as the value of the U.S. dollar has sharply fallen. The price fell below $100 on Thursday on fears of a U.S. economic slowdown.

Cheney's trip follows a visit to Saudi Arabia by President George W. Bush, who in January called for crude oil exporters' group OPEC to increase production.

"They are going to build off of the president's discussions here clearly. They will review those discussions. They will review a broad agenda of diplomatic and security issues as well
as where we are now in the global energy market," Hannah said.

Cheney will also review his trips in the last few days to Iraq and Afghanistan during his talks with Abdullah at the king's farm on the outskirts of Riyadh.

Cheney, who flew into Riyadh from Oman with his wife Lynne and daughter Liz, arrived at the king's farm, where he was greeted by Abdullah and Saudi aides carrying incense.

"Mr. Vice President, we've been friends for a very long time," Abdullah said before awarding Cheney a high Saudi award with a green sash and a medal.

While they will cover a broad range of issues, energy will be a key topic, with high oil prices hurting the U.S. economy.

"They will have ample discussions about both the problems that exist in the market, whether they, how they lend themselves to various kinds of solutions," Hannah said.

A senior administration official, speaking on condition of anonymity, said: "Clearly there are medium and longer term things that people can do to try and increase global capacity.
There's obviously things the United States can do."

"But there's also things that the Saudis and Russians and others can do to invest in their capacity to produce more oil over time and in fact the Saudis have been doing that for
several years already," the official said.

Iran would be high on Cheney's agenda as well as Syria and Lebanon. He would also encourage the Saudis and others to support international efforts to help Iraq and Afghanistan.

The United States wants Saudi Arabia and other Arab allies to establish a diplomatic presence in Iraq and help reconstruction efforts in Afghanistan.

"I imagine he'll be looking to encourage the Saudis as well as other Arab countries to continue to support the international community's efforts to help Iraq and Afghanistan and certainly
in both cases to look for places where they can actually increase their support to those governments," the official said.

They may also discuss Pakistan post-election, the official said. "The Saudis have long-standing relationships with both President Musharraf as well as with former Prime Minister Nawaz
Sharif. So they clearly have some influence in Pakistan."

The United States sees Pakistan as an important ally in fighting terrorism.

Cheney and his family will spend the night at the Janadriya farm and leave Saudi Arabia on Saturday for Israel.