The Saudi oil minister Khalid Al Falih said on Tuesday that oil market fundamentals were improving as an agreement to curb supply by Opec and non-Opec producers took effect.
But he said Opec would not let rival producers take advantage of the cuts to underwrite their own production investments. The group is expected to meet again in May, when it could consider extending the production curbs.
Saudi Arabia had cut beyond what it had pledged in the agreement and brought the kingdom’s output below 10 million barrels per day, he said
"We should not get ahead of the market," Mr Al Falih told a group of oil industry executives at the CERAWeek energy conference.
Overall, he said the production reductions have had their intended effect, citing greater price arbitrage between east and west oil markets that "indicate the cuts are biting".
He said there are signs of "green shoots" of oil investment in the United States although he cautioned that a fast response from the US shale industry could be discouraging for needed investment in multi-year, long-term projects in other oil supply sources outside of shale.
He said Saudi Arabia does not want Opec to intervene in the oil market to address long-term structural shifts, but would support measures to address "short-term aberrations".
The production-reduction pact, which was joined by non-Opec countries including Russia and Kazakhstan, was intended to reduce global output by about 1.8 million bpd, and bring supplies closer to demand. The six-month agreement originally took effect on January 1.
The production-reduction agreement was put together "for the benefit of all, and needs to be addressed by all," Mr Al Falih said.
He also said the initial public offering of Saudi Aramco remains on track and "we expect it to take place in 2018." The IPO could value the energy giant at between $1 trillion and $1.5 trillion, analysts have estimated.
Also yesterday, the state-owned oil major Saudi Aramco said it sees investment in a new energy industrial city in Saudi Arabia to be US$4.4 billion, according to a senior Aramco official.
Close to Abqaiq in eastern Saudi Arabia, the city will develop energy-related industries.
Speaking at a conference in Bahrain, Abdulaziz Al Abdulkarim, the vice president for procurement and supply chain management, also said investment in the huge ship repair and shipbuilding complex Ras Al Khair would be 21.8bn Saudi riyals (Dh21.34bn).
Saudi officials have said the King Salman International Complex for Maritime Industries and Services, being developed by Saudi Aramco and foreign partners, would cost more than $5bn.
Both projects will help to create thousands of jobs, a key part of Saudi Arabia’s Vision 2030, an economic reform programme aimed at diversifying the economy beyond reliance on oil.
Abdulkarim is overseeing a Saudi Aramco initiative known as In-Kingdom Total Value Add (IKTVA) to double the percentage of locally produced energy-related goods and services to 70 per cent of the total spent by 2021.
As part of these efforts, the US-listed Rowan Companies and Nabors Industries are among companies that announced plans to boost manufacturing in Saudi Arabia in joint ventures with Saudi Aramco.

Source: The National