Saudi Arabia’s Energy Minister Khalid al-Falih said local demand for gas and electricity has fallen after reforms in the energy price.
At the Abu Dhabi Sustainability Week conference on Tuesday, al-Falih said he was "very optimistic" about the outlook for the oil market after producers cut output to support flagging prices.
He predicted that domestic energy consumption would decrease by 1.5-2 million barrels per day of oil by 2030 after local reforms are implemented.
Al-Falih also said Saudi Arabia was in talks with the UAE and Oman to extend a regional gas network after an independent audit revealed that the kingdom has massive oil and gas reserves.
“Aramco is seeking to develop gas resources in the kingdom to meet local needs with a possibility of exporting in the future,” al-Falih said.
Al-Falih said he is confident that "within the next few weeks" the market conditions will return to normal and confidence will be restored.
"I am very optimistic," al-Falih said.
The Saudi minister also downplayed the impact of an expected global economic slowdown on the oil market.
"I am not ruling out a cyclical recession. I think we all know that these things are a fact of life," especially after a long expansionary period, al-Falih said.
"I just don't see it as a major shock to the global economy. Certainly, I don't see a big spillover into the oil market," he said.
Speaking at the third edition of the Atlantic Council Global energy forum, which took place in the Emirati capital, Abu Dhabi, al-Falih had addressed Riyadh’s position on the volatile oil market.
Following the 1.2 million cut which came into effect at the beginning of January, according to al-Falih, “secondary sources suggest that OPEC production in December was already more than 600,000 barrels per day lower than November.”
“As the new 1.2 million barrel cut materializes, we should start to see the impact positively reflected in inventories,” he added.