DOHA, QATAR — Demand for Saudi crude is likely to rise over the next few months, Saudi oil minister Ali Al-Naimi said on Monday, in a sign that the world's largest oil exporter sees a recovery in its biggest export market, Asia.
State-run Saudi Aramco cut production sharply in the fourth quarter of last year because of weak economic growth abroad and lower seasonal demand for oil for power generation at home.
It kept oil output steady at around 9.05-9.15 million barrels per day [bpd] in January and February, but industry sources have said exports could rise in the second quarter, driven by Asian demand.
Naimi confirmed on the sidelines of an industry event in Doha on Monday that he expected external demand for Saudi crude to rise over coming months, but said it remained to be seen by how much.
China's factory activity rebounded in March in a sign that its underlying economic recovery is strong enough to weather any uneven export periods, surveys showed on Monday.
China imported 1.08 million barrels a day of crude from Saudi Arabia in 2012, up 7.24 percent from 2011, and state-run CNPC expects China's total net imports to rise again in 2013.
Saudi Arabia, OPEC's leading producer and holder of the world's only significant spare capacity, slashed its output by around 700,000 bpd over the last two months of 2012, helping drive a rise in crude prices from early December to February.
With Europe wallowing in debt and the United States consuming more of its own oil, demand from Asia has become the main driver of oil exports from producers in the Gulf Cooperation Council [GCC] over the last decade.
Asia collectively bought more than three times as much Saudi crude in 2011 as buyers in North America, and five times more than Europe, according to Saudi government data.
Rapid population growth in Asia, and a booming middle class in China in particular, is likely to see ever more Saudi crude head east as European and U.S. oil import demand wanes.
"For decades, GCC energy supplies helped support economic growth in the U.S. and across Europe... We have done the same in Asia, supplying energy to help fuel its increasing growth and prosperity," Naimi told the Brookings Doha Center.
"It is thanks to Asian demand and GCC energy supplies that our region's combined GDP is at an historic high - and that economic growth remains strong," he said, pointing to population growth as a firm driver for future demand.
OPEC oil producers have played down the potential threat of a surge in North American shale oil production over the last few years, arguing that more supplies are good for price stability.
"I, for one, welcome all new energy sources to the market. I don't think anyone should fear new supplies when set against increasing global demand," Naimi said, according to a copy of his speech in Doha sent to the media.
"More companies and nations are competing for their slice of the energy pie. That's true. But the pie is getting bigger and there is enough to go around."