WASHINGTON (Reuters) - The United States on Wednesday accused Saudi Arabia of severe violations of religious freedom in a rare official rebuke of a close ally and key oil supplier that potentially could lead to sanctions.

"Freedom of religion does not exist" in Saudi Arabia, the State Department said in an annual report tracking religious freedom worldwide. It included the kingdom for the first time on a blacklist of eight countries "of particular concern."

"Freedom of religion is not recognized or protected under the country's laws and basic religious freedoms are denied to all but those who adhere to the state-sanctioned version of Sunni Islam," the report said.

Wednesday's surprise designation allowed for a range of sanctions on Saudi Arabia, but there was no expectation any would be applied on the world's largest oil exporter.

"Rather, it's just our way of sending a clear signal to the Saudis that this is a serious issue for us, a problem, and that we want to talk to them about allowing tolerance of religious beliefs and other practices," said a State Department official, who asked not to be named.

Vietnam and Eritrea were also added to the list this year, joining Burma, China, Cuba, Iran and North Korea.

The report said in Vietnam religious freedom remained poor or deteriorated for some groups, notably minority Protestants and some independent Buddhists, and the Eritrean government harassed and arrested members of different Christian groups.

The Saudi Embassy in Washington said it had no immediate comment on the U.S. report, which also said government-paid preachers used violent anti-Jewish and anti-Christian language in their sermons.

Since the Sept. 11, 2001 attacks on the United States, when most of the hijackers were from Saudi Arabia, Washington's relations with the monarchy have been controversial and have become an issue in the U.S. presidential election.

POSSIBLE BACKLASH

With high oil prices affecting the U.S. economy, which is key to President Bush's re-election hopes, Democrats have charged he has ignored Saudi Arabia's rights record for fear of causing any backlash from the oil supplier.

"Over the years, there has been a sense that we have been pulling our punches because Saudi Arabia is an ally and oil supplier," the State Department official said.

Secretary of State Colin Powell suggested Wednesday's rebuke would not affect other aspects of the U.S.-Saudi relations. The two have cooperated increasingly closely against Muslim militant groups.

"Let me emphasize that we will continue engaging the Countries of Particular Concern with whom we have bilateral relationships," Powell told reporters.

He said the reports were "just one of the best ways for us to encourage our friends to adopt tolerant practices."

But there was little expectation in Washington that Saudi Arabia would change its practices in response to the rebuke.