Iran General NewsObama to hear Saudi worries on Iran, discuss oil

Obama to hear Saudi worries on Iran, discuss oil

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ImageReuters: U.S. President Barack Obama is set to discuss with King Abdullah the Arab-Israeli conflict, diplomatic overtures toward Iran and oil prices when he starts a tour to the Middle East and Europe in Riyadh on Wednesday.

By Ulf Laessing

ImageRIYADH (Reuters) – U.S. President Barack Obama is set to discuss with King Abdullah the Arab-Israeli conflict, diplomatic overtures toward Iran and oil prices when he starts a tour to the Middle East and Europe in Riyadh on Wednesday.

Saudi Arabia is the first stop in a tour that will take Obama to Germany, France and Egypt, where he plans to deliver a much-anticipated speech to the Muslim world.

Al Qaeda's second-in-command urged Egyptians on Tuesday to reject Obama's visit, calling him a criminal.

Washington hopes Saudi Arabia will play a moderating role in OPEC and counter price hawks such as Iran after oil prices hit a seventh-month high, threatening prospects of an imminent global economic recovery.

Saudi Arabia and the United States have a near 60-year-old relationship based on guaranteeing oil supplies in return for U.S. protection for the Saudi monarchy.

Obama said on Thursday he would raise the issue of oil prices with King Abdullah and planned to say the big price rises are not in Riyadh's interest.

"The U.S. will be keen for OPEC to ensure that oil prices remain reasonable. Saudi Arabia has played the swing producer role, balancing global growth with desired oil price levels," said Monica Malik, a regional economist at EFG-Hermes.

Saudi Arabia, which has more than one-fifth of global crude reserves, wants to hear how serious Obama is with plans to lower U.S. dependence on Middle East oil and diversify energy resources away from fossil fuels, analysts say.

"The growing realization among Saudi officials that the Obama administration means what it says when it talks about diversifying … may soon begin to create tensions in the bilateral relationship," political risk agency Eurasia Group said in a note.

Obama said he would indicate to King Abdullah the United States did not plan to eliminate its need for oil imports in the immediate future.

Two days before Obama's arrival, the Saudi cabinet reiterated the kingdom saw "the fair price" for oil at $75-$80 a barrel — 17 percent higher than current levels.

GETTING TOUGH WITH NETANYAHU?

King Abdullah is expected to express his worries that Obama's diplomatic overtures to Iran may rejig regional relationships at Riyadh's expense, diplomats and analysts say.

Saudi Arabia wants Obama to get tough with Israeli Prime Minister Benjamin Netanyahu, who has balked at Palestinian statehood and rebuffed U.S. calls to halt settlement building.

"I don't think Saudi-American relations will suffer but they may go through difficult times if the administration is not willing to come up with a new policy, a new plan," said Khaled Dakhil, a politics professor at King Saud University.

There was no room for more concessions beyond a 2002 Arab peace plan promoted by King Abdullah offering Israel recognition in return for withdrawal from Arab land occupied in 1967 and a just solution to the issue of Palestinian refugees, Dakhil said.

Saudi rulers believe the collapse of Middle East peacemaking has given Iran opportunities to expand its regional influence through Sunni Islamist groups such as the Palestinian Hamas, as well as its traditional Shi'ite Hezbollah allies in Lebanon.

The kingdom, which sees itself as the bastion of majority Sunni Islam, fears an eventual U.S. deal with Iran would make the Shi'ite power part of a new political and security order.

The United States itself might appreciate a Saudi role in countering Taliban militants in Pakistan and Afghanistan. The Saudis hosted talks in September between pro-government Afghan representatives and former Taliban officials on how to end a conflict that also involves the Taliban's al Qaeda allies.

Saudi Arabia is among the United States' top 15 trading partners, with two-way trade worth $67.3 billion last year. The kingdom, whose currency is pegged to the dollar, has expanded trade with Asia in recent years but still depends on high-tech U.S. goods.

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