Bush wraps up Middle East visit

SHARM EL-SHEIKH, Egypt (Reuters) - U.S. President George W. Bush, wrapping up a Middle East trip on Wednesday, hopes his talks in Saudi Arabia will help encourage OPEC to raise production and dampen oil prices, the White House said.

Bush brought up the issue of high oil prices, which have touched $100 a barrel, and their effect on the economy at the desert ranch of King Abdullah of Saudi Arabia on Tuesday.

"The president said that there is a hope as a result of these conversations that OPEC would be encouraged to authorise an increase in production," White House spokeswoman Dana Perino told reporters travelling with Bush to Egypt from Saudi Arabia.

"The president said that the king says that he understands that the high price of oil can negatively affect economies around the world, and when economies aren't growing as fast as they have been other economies are going to suffer," she said.

"So the president believes it's in everyone's interest to have adequate supplies of oil to deal with the amount of demand," she added.

In his final stop before returning to Washington, Bush arrived in the Red Sea resort of Sharm el-Sheikh to meet with Egyptian President Hosni Mubarak.

The Egyptian government is one of Washington's closest friends in the Arab world but Bush and Mubarak have not met for more than four years, Egyptian officials said.

Bush has been telling regional allies that Iran is a threat, Israeli-Palestinian peace efforts need support, and high oil prices are in no one's interest.

He spent two nights in Saudi Arabia stressing close personal ties, and raised concern about the high price of oil with the leader of the world's biggest oil exporting country.

"The president reiterated the issue of there being tight supply and very high and rising demand, not just in America but around the world, especially in India and China," Perino said.

"This is not a situation that's going to be solved overnight," she said, adding that Bush has been "pursuing aggressively alternative and renewable forms of energy".

IRAN LOOMS LARGE

The dominant themes of Bush's trip were Israeli-Palestinian peace efforts and U.S. tensions with Iran.

Last week Bush made his first presidential visit to Israel and the occupied West Bank and said he expected the two sides to sign a peace treaty before he leaves office in January 2009.

He tried to rally Arab support for peacemaking efforts, including reaching out to Israel, during his visit to Gulf allies including Kuwait, Bahrain and the United Arab Emirates.

"They wanted to make sure that the efforts by the United States were real," Bush said on Tuesday.

Saudi Arabia, considered a linchpin in any broader Israeli-Arab reconciliation, criticised Israel for settlement expansion and suggested it had no immediate plans to take any significant new steps toward Israel.

"I don't know what kind of outreach we can have for the Israelis but to offer a peace plan for the region," Saudi Foreign Minister Saud al-Faisal said at a news conference with Secretary of State Condoleezza Rice.

An Arab summit last March reiterated a 2002 offer of peace with Israel if it returned occupied land.

Bush has also been trying to shore up support against Iran, and he told allies that he still considered Tehran a threat despite a U.S. National Intelligence Estimate that said Iran stopped its nuclear weapons program in 2003.

"I have spent a fair amount of time on Iran in every stop," Bush said on Tuesday.

"I just made it clear that all options are on the table, but I'd like to solve this diplomatically ... and talked about making sure consistent messages emanated from all parts of the world to the Iranians," Bush said.

Analysts say that while Washington's Arab allies are wary of Iran's growing influence in the region, they do not want to see a U.S. military confrontation with Tehran.

"Iran is a neighbouring country and important in the region. Naturally, we have nothing bad towards Iran," the Saudi foreign minister said. "We hope that Iran also responds to the international legitimacy requirements."