RIYADH, Saudi Arabia (CNN) -- President Bush lobbied Saudi Arabia on Tuesday to boost oil production and help the U.S. economy by forcing fuel costs down.
Saudi King Abdullah embraces President Bush in Riyadh on Monday.
Oil prices have peaked at $100 a barrel and are hovering just below triple digits, adding to fears that historically high fuel prices could help push the U.S. economy into recession.
"Oil prices are very high, which is tough on our economy," Bush said on the second day of his visit to the Islamic kingdom -- one of the key members of the OPEC oil cartel.
"I would hope, as OPEC considers different production levels, that they understand that if ... one of their biggest consumers' economy suffers, it will mean less purchases, less gas and oil sold," Bush said. Watch more on Bush's visit »
Shortly after Bush's comments, Ali al-Naimi, the kingdom's minister of petroleum and mineral resources, told reporters that Saudi Arabia "will raise production when the market justifies it." Al-Naimi said Saudi policy aims "hopefully [to] keep supply matching demand with minimum volatility in the international oil market."
Saudi King Abdullah and Bush were to meet again Tuesday after huddling together Monday night.
"We've got a lot of things to talk about, but I want to assure you it's in the spirit of friendship," Bush said.
The president also was expected to attend a "Roundtable with Saudi Entrepreneurs" hosted at the U.S. Embassy.
Saudi Arabia is the fifth of a six-nation tour of Middle East nations that Bush began last week aimed at garnering support for Palestinian-Israeli peace talks and shoring up regional security against terrorism. See Bush's itinerary »
U.S. Secretary of State Condoleezza Rice, who had been traveling with the president, arrived Tuesday in Iraq on an unannounced visit to meet with Iraqi officials. Rice plans to press Iraqi leaders for more progress on political reconciliation among the nation's many factions, said an official with the U.S. Embassy in Baghdad.
While in Saudi Arabia, Bush also issued a stern warning to Iran in the wake of a January 6 confrontation between U.S. Navy and Iranian vessels in the Strait of Hormuz.
"So the Iranians ... better be careful and not be provocative and get out there and cause an incident," Bush told reporters. "Because there's going to be serious consequences. What I said in my statement was, if they hit one of our ships there's going to be serious consequences. And I meant it."
On Monday, the Bush administration announced a proposed weapons sale to Saudi Arabia as part of a Persian Gulf security strategy to counter threats posed by Iran's rising influence in the region. Watch more on the proposed deal »
The proposed $20 billion arms deal includes the sale of 900 "joint direct attack munitions" worth close to $120 million, said U.S. State Department spokesman Sean McCormack.
Sen. Joseph Biden, chairman of the Senate Foreign Relations Committee, said the committee would examine the deal.
"We need to be convinced that the sale makes sense militarily and ensure that it in no way harms our security or those of our allies," Biden, D-Delaware, said in a news release. "We must also make certain that the administration does not just try to use a few arms sales to substitute for the comprehensive, coherent strategy we need for the region."
Top Iranian officials have slammed Bush's Mideast tour -- one of them saying the American leader was attempting to stir up "Iranophobia," a state-run Iranian news agency reported.
Iran's Islamic Republic News Agency on Monday cited the comments of Foreign Minister Manouchehr Mottaki and Ala'eddin Boroujerdi, head of the Iranian parliament's National Security and Foreign Policy Commission.
Bush, in a speech Sunday in Abu Dhabi, labeled Iran as the "world's leading sponsor of terror" and asked allies to join the United States in confronting Iran "before it's too late."
But Mottaki -- who made his remarks to Al-Jazeera news network Sunday -- said the United States "was the main cause of extremism in the region as it has been supporting terrorist and extremist groups during the past six years."
He said Bush was trying to foment tensions in the Persian Gulf over the Strait of Hormuz confrontation.
The report paraphrased Boroujerdi as saying Bush's talk about Iran "is the saber-rattling of a defeated man."
Mottaki called the American version of the Hormuz incident fabricated, the Islamic Republic News Agency said.
The report paraphrased Mottaki as saying that "fanning the fuel of Iranophobia was the objective of Bush's visit to the region."
So far on his Mideast tour, the president has visited Israel, the West Bank, Bahrain, Kuwait and the United Arab Emirates. He plans a stop in Egypt before returning to Washington. E-mail to a friend
CNN's Ed Henry contributed to this report.