Saudi King Abdullah, right, examines the King Abdul Aziz Order of Merit on President Bush, left, with after bestowing it upon him following their dinner at Riyadh Palace on Monday.

Riyadh, Saudi Arabia ? President Bush delivered a sophisticated weapons sale for Saudi Arabia on Monday, trying to bolster defenses against threats from U.S. adversary Iran and muster support in this oil-rich kingdom for a long-stalled Mideast peace agreement.

On a surprisingly cold day with blustery winds, Bush received a warm embrace from King Abdullah, whose family wields almost absolute rule. Among ordinary Saudis and across much of the Mideast, Bush is unpopular, particularly because of the Iraq war and unflinching U.S. support for Israel.

Bush and Abdullah were going to some lengths over two days to emphasize their strong personal ties.

Saudi Arabia holds the world’s largest oil reserves and surging fuel costs are putting a major strain on the troubled U.S. economy.

Today, Bush said that he is having discussions with Abdullah about how high oil prices are affecting the United States.

“It’s tough on our economy,” Bush said before he began a roundtable with Saudi business people.

“I would hope that as OPEC considers (its response to higher prices) that they understand when their biggest consumer’s economy suffers, it means less purchases, less oil and gas sold.”

The issue of high oil prices also has come up in earlier stops on Bush’s eight-day trip, largely in the context of his quest for alternate fuels and sources of energy.

White House counselor Ed Gillespie said Mideast leaders have “talked about the nature of the market and the vast demand that’s on the world market today for oil.”

Coinciding with Bush’s arrival Monday, the administration officially notified Congress it will offer Saudi Arabia sophisticated Joint Direct Attack Munitions – or “smart bomb” – technology and related equipment. The deal envisions the transfer of 900 of the precision-guided bomb kits, worth $123 million, that would give Saudi forces highly accurate targeting abilities.

Some lawmakers fear the systems could be used against Israel but Congress appears unlikely to block the deal because of Saudi Arabia’s cooperation in the war on terror and in deterring aggression from Iran.

The United States already has notified Congress of five other packages to Saudi Arabia, the United Arab Emirates and Kuwait, including Patriot missiles. The total amount of eventual sales as part of the Gulf Security Dialogue is estimated at $20 billion, a figure subject to actual purchases.

On Mideast peace, Saudi Arabia handed Bush a coup by taking part in the U.S.-sponsored Mideast peace conference in Annapolis, Md., in November. Bush was expected to encourage Saudi Arabia during his visit to use some of its vast wealth to help struggling Palestinians build the foundations of a future state. Bush also sees support from Arab neighbors as crucial to the Palestinian leadership being able to successfully negotiate with Israel over borders and other contentious issues.