By Angus McDowall
RIYADH (Reuters) - U.S. Secretary of State Hillary Clinton met Saudi Arabia's king and foreign minister in Riyadh on Friday to discuss the Syria conflict against a backdrop of tension with Iran and oil policy differences.
The world's main superpower and its top oil exporter have been strategic allies since the 1940s, but discord over how to respond to Arab popular uprisings strained relations last year.
"Both sides have recognized that their common interests are much more significant than the issues that have recently been dividing them," said Robert Jordan, U.S. ambassador to Riyadh from 2001-03, citing anti-terrorism cooperation, concerns over a nuclear Iran and wider Middle East stability.
Pictures broadcast on state television showed Clinton meeting King Abdullah as other officials, including Foreign Minister Prince Saud al-Faisal, Defense Minister Prince Salman and Intelligence Minister Prince Muqrin, looked on.
Although the two states have mended the rift, differences persist on regional policy and how to tackle high oil prices.
The United States and other consumer countries fear Saudi Arabia may cut oil output if they release emergency reserves, neutralizing their effort to cool world energy markets.
Diplomats and industry sources said Western countries may want Clinton to seek reassurance that the Saudis will not undercut their bid to cut their fuel costs.
Oil prices have risen sharply since the start of the year, at one point breaking $128 a barrel, largely because of expanded sanctions imposed on major oil exporter Iran aimed at slowing its disputed nuclear program.
Saudi Arabia says it also wants to reduce oil prices, but that the last stocks release failed to do so and that it is already meeting all demand for its crude.
"You saw what happened in the last release? Nothing," said Oil Minister Ali Naimi in Doha last week.
SYRIA AND IRAN
Backed by Western countries, Saudi Arabia has spearheaded Arab efforts to press Syrian President Bashar al-Assad, who is allied with Iran, to end his bloody suppression of a year-old uprising and step aside.
The Saudis now want to see stronger action against Assad, including the arming of rebels, something the United States is reluctant to do for fear of being drawn into a messy civil war.
"The policy options are very limited. The United States is in no position to assist in arming the rebels or to provide any kind of military support for them. So my guess is there will be efforts from the Saudis to coordinate proposals and at least buy time for the rebels," the former U.S. envoy Jordan said.
After meeting Saudi and other Gulf Arab foreign ministers on Saturday, Clinton will head to Turkey for meetings with the Syrian opposition.
Underpinning Clinton's talks in Riyadh is a wider context of the impact of last year's Arab uprisings on a regional struggle between Sunni Muslim Saudi Arabia and Shi'ite Muslim Iran.
A new "strategic forum" between the United States and its Gulf Arab allies, to be announced during Clinton's visit, is designed to present a united front, analysts say.
At the last summit of Gulf leaders in Riyadh in December, King Abdullah said the six members of the Gulf Cooperation Council should join together as "a single entity", a remark widely interpreted as a demonstration of unity against Iran.
In October, the United States said it had uncovered an Iranian-backed plot to assassinate the Saudi ambassador to Washington. Iran denied any involvement in the alleged conspiracy, which was interpreted in Riyadh as part of a broad campaign being waged by Tehran against Saudi interests.
Riyadh suspects Tehran of backing unrest led by neighboring Bahrain's Shi'ite majority against the island state's Sunni monarchy, supporting rebels in northern Yemen and fomenting violence among its own Shi'ite minority in an eastern province.
U.S. President Barack Obama initially sought to engage Iran after his 2008 election. But he has since pushed for stronger sanctions to halt a suspected Iranian drive to acquire nuclear weapons. Tehran says its program has only peaceful aims.
(Reporting By Angus McDowall; Editing by Alistair Lyon)