HOUSTON — Minister of Energy, Industry and Mineral Resources Khalid Al-Falih said on Tuesday that oil market fundamentals were improving after an agreement struck with top oil producers to curb supply and end a two-year glut took effect.
Saudi Arabia had cut beyond what it had pledged in the agreement and brought the Kingdom’s output below 10 million bpd, he told energy executives and oil officials gathered at the CERAWeek industry conference in the US energy capital of Houston.
Suppliers participating in the curbs have cut more than 1.5 million bpd, Falih said, exceeding what he called the market›s low expectations.
Global oil demand would grow by 1.5 million bpd in 2017, and increased output from the United States, Brazil and Canada would be more than offset by natural declines in aging fields, he said.
“There is… cause for cautious optimism as we see the ‘green shoots’ of the recovery,” Falih said.
Still, he cautioned against any “irrational exuberance” among investors. “We should not get ahead of the market,” he said.
Oil inventories worldwide had fallen “slower than I thought,” in the first two months of the year, Falih told the CERAWeek industry conference.
Inventories in developed countries remain about 300 million barrels above the norm, he said.
It was premature to consider whether the cuts should be continued into the second half of the year, he said.
Those discussions would be held in May, when OPEC next meets, the Saudi energy minister added.
He praised the administration of US President Donald Trump for its focus on energy issues, citing its “pro-business and pro-petroleum” policies.
“We look forward to working with the new administration,” he said.
Saudi investment in the United States is vast, and Saudi efforts to reduce global oil market volatility were of direct benefit to the US oil industry, he said.
Falih, who is also chairman of Saudi Aramco, said the initial public offering of the national oil company remains on track and “we expect it to take place in 2018.”