(Adds Saudi oil minister, paragraphs 10-12) By Matt Spetalnick RIYADH, Jan 15 (Reuters) - President George W. Bush urged Saudi Arabia on Tuesday to help tame soaring oil prices which threaten the U.S. economy, saying exporters should help get more crude into the market. On a tour aimed at countering Iran's growing regional influence, Bush also warned Tehran he would hold it responsible if it hit American ships in Gulf waters which carry 40 percent of the world's traded oil. Bush said he would raise his concerns about high oil prices face-to-face with his Saudi host King Abdullah, ruler of the world's biggest oil exporter, at the monarch's desert getaway later on Tuesday. "OPEC should understand that if they can put more supply on the market it will be helpful," Bush told reporters when asked what the producer group could do to alleviate high oil prices. "I will say to Abdullah that high energy prices can affect economic growth because it's painful for our consumers ... could cause the U.S. economy to slow down." Bush's overnight stay at King Abdullah's Al Janadriyah ranch near Riyadh on Tuesday had been seen as a chance to set aside talk of Middle East peace, Iranian challenges and controversial arms deals that dominated the first day of his visit. Bush has made clear he wants to deal with a subject that has emerged increasingly as an irritant in otherwise close relations between Washington and the Islamic kingdom. "I would hope, as OPEC considers different production levels, that they understand that if their -- one of their biggest consumers' economy suffers, it will mean less purchases, less oil and gas sold," he said. French President Nicolas Sarkozy, who is also touring the Gulf, said in Riyadh on Monday that oil should be closer to $70 per barrel than the current level above $90. He called on Saudi Arabia to use its influence to moderate prices. Saudi Oil Minister Ali al-Naimi responded to Bush's calls by saying there was more to economic performance than the price of oil, but that OPEC's most influential member was ready to boost output when the market needs its. "Concerns about U.S. economic growth are valid. But the U.S. economy is more than just the price of oil," Naimi said. "OPEC is not the only influence... Non-OPEC is also producing oil." Naimi declined to say if OPEC, source of a third of the world's oil, would raise output at its Feb. 1 meeting in Vienna. OPEC has repeatedly said it is pumping enough crude and blames speculation, a weak dollar and geopolitical tensions, such as fears of war with Iran, for record high oil prices. WARNING TO IRAN Bush repeated his threat of serious consequences if Iranian vessels confront U.S. war ships in the Gulf after an incident on Jan. 6, but said he told Gulf Arab leaders he wanted to solve the standoff over Iran's atomic programme "diplomatically". "If they hit our ships, we will hold Iran responsible," Bush said. "They'd better be careful and not be provocative." Iran has denied U.S. accounts of a naval incident in which Washington says Iranian vessels threatened three U.S. ships in the Strait of Hormuz. Bush said he had faced questions from leaders about whether last month's U.S. intelligence report, which said Iran stopped an active nuclear programme in 2003, signalled a lessening of resolve against Tehran. He said he assured them that Washington remained committed and that "they (Iran) are still a threat." As part of his efforts to contain Iran, Bush made clear on Monday his commitment to a major arms sale to Saudi Arabia. Just hours after his arrival in Riyadh, the U.S. administration said it notified Congress of its intention to offer the Saudis a package of advanced weaponry as part of a multibillion-dollar deal with Gulf Arab allies. The deal, covering 900 precision-guided bomb kits worth about $120 million, has raised concerns in Israel and its U.S. supporters about the military balance of power in the region. Seeing progress in neighbouring Iraq, Bush sent Secretary of State Condoleezza Rice to Baghdad on a mission to try to build on what his administration sees as progress on political reconciliation, the White House said. "The (Iraqi) leadership is more confident. The grassroots is more involved ... The government is beginning to respond," Bush told a handful of journalists in Saudi Arabia. Bush wants Saudi Arabia to cajole other Arab states into bolstering the Israeli-Palestinian peace process that he hopes, in the face of deep scepticism, will yield a final deal before he leaves office in January 2009. During his visit to Janadriyah, Bush will see how the royals live in one of the world's richest oil producers. He will stay the night at the sprawling tent-like structure with walls made of silk. On display when Bush arrived was a bejewelled embroidered fuchsia saddle traditionally used for riding Arabian stallions. King Abdullah has 260 Arabian horses including one called Aly Sheba, a famous race horse bred in the United States. (Additional reporting by Andrew Hammond; Editing by Sami Aboudi)
People carry the bodies of Palestinians after they were killed by Israeli troops during a raid in Gaza January 15, 2008. Israel killed 16 Palestinians, nearly all of them Hamas militants, ...
