The global oil market is moving closer to balance even as increases in US oil production push prices down in the short-term, Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said.
“This is not a good indication of where the market is likely to be headed going forward, as the large new production capacity and investment we will need in the future are lagging,” Nasser said during an event at Columbia University in New York Friday, Bloomberg reported.
“While the short-term market is pointing to a surplus of oil, the supply required in the coming years is falling behind.”
Many indicators are pointing to a more balanced market, Nasser said. The combined inventories of countries in the Organization for Economic Cooperation and Development are flattening and poised to drop, among other signs that the market is tightening, he said.
Saudi Arabia, the Organization of Petroleum Exporting Countries’ biggest producer, is cutting output as it leads efforts to eliminate a global crude glut and bolster prices.
The country produced almost 10 million barrels a day in March, it reported to OPEC. All the country’s oil was pumped by Saudi Aramco, as the company is known.
Aramco is planning what may be the world’s largest stock sale.
The kingdom is courting foreign investors as it seeks to diversify its economy and gears up for the planned sale of a 5% stake in the company.
Deputy Crown Prince Mohammed bin Salman, the king’s influential son, has said the company could be worth more than $2 trillion.
The initial public offering will probably take place in the second half of 2018, Nasser previously said.
The IPO is “on track. Everything is going very well,” Nasser added.
Last month, the Saudi government slashed the level of taxation imposed on the company, lowering the rate to 50% from 85% in a bid to boost the valuation.
Helped by the lower levy, the company’s oil and natural gas reserves equivalent to 310 billion barrels could make it worth between $1 trillion to $1.5 trillion, based on valuations for other producers, Sanford C. Bernstein & Co. said last month.