Bush (right) with Abdullah in Riyadh on Friday. (AFP)

Riyadh, May 16 (Reuters): Saudi Arabia announced a modest increase in oil output today after an appeal from visiting President George W. Bush but the news did little to douse oil prices that hit a new record earlier in the day.

On his second visit to the world’s biggest oil-exporter this year, Bush renewed his appeal for more oil from OPEC amid rising pressure at home to take action as record fuel prices weigh on the US economy.

Saudi Arabia said it had raised output by 3.3 per cent last week, and was willing and able to raise output further but saw no customer demand.

“Customers, where are you? I want to sell oil but where are the customers. I can’t sell oil just to be stored at sea,” Saudi foreign minister Prince Saud al-Faisal told a news conference.

Asked about Bush’s response, Saud said: “He was satisfied.”

Saudi oil minister Ali al-Naimi told US officials that increased output would not reduce costs at the pump for US motorists as soaring prices were mainly the result of a weak dollar, speculation and tensions in oil-producing countries.

Since Bush’s last visit to Saudi Arabia in January, oil prices have jumped some $30 to a new record near $128 a barrel today, adding to US recession fears.

“Clearly the price of (gasoline) is too high for Americans ... We have not enough supply and too high demand. Trying to get more supply out there is good for everyone,” White House spokesperson Dana Perino said before the meeting.

“We have had sluggish growth; with lower oil prices we could certainly have better growth.”

The US, the world’s largest energy consumer, also reached agreements with Saudi Arabia to help it protect its oil resources and assist it in developing peaceful nuclear energy.

The announcement came as Bush ended a three-day trip to Israel where he vowed to oppose Iran’s nuclear ambitions.

Tehran says its programme is peaceful but Bush said it would be “unforgivable” if Iran were allowed to get the bomb.

US national security adviser Stephen Hadley said the two leaders believed “Iran, working directly and through Syria, was very much behind what happened in Lebanon”, where Hezbollah has routed fighters loyal to the government backed by Saudi Arabia and the West.

They also discussed how to “confront Iran’s negative actions and behaviour and increase pressure on Iran”.