OREANDA-NEWS. Saudi Arabia's oil minister Ali Naimi today pointed to rising global oil demand and tighter supply, a sign that the country's plan to defend market share rather than price is bearing fruit.

Asked if Saudi Arabia's strategy is working, Naimi said, "The answer is yes."

Naimi spoke to reporters as he arrived in Vienna to attend an Opec seminar on 3-4 June followed by a ministerial meeting on 5 June. Opec is expected to maintain its output ceiling target of 30mn b/d at its meeting. It will be Opec's first meeting since November, when Saudi Arabia pushed through its new strategy of supporting market share to squeeze other producers.

"Demand is picking up," Naimi said. "Supply is slowing, right? That is a fact."

Asked when he expects the oversupplied global oil market to rebalance, Naimi said this would "take time".

"I do not have a crystal ball but it is going in the right direction," he said.

Naimi said it is unlikely that large volumes of crude that went into storage in recent months would be resold and depress prices. That is because market contango – when prompt prices are lower than forward prices – is narrowing, which will encourage inventory holding, he said.

"This is not a good time to sell the surplus. So they have to keep it and as the contango goes down and they see the backwardation coming forward they will hang on to it. They are not going to dump it on the market," Naimi said.

The Saudi oil minister said he was not stressed about the upcoming meeting. "You can see that I am not stressed, I am happy," Naimi said.

Naimi pushed through the new strategy at Opec's last ministerial meeting in November to avoid cutting output despite a looming supply glut amid rising US shale supply.

Since then, Riyadh has boosted its output to over 10mn b/d to defend its market share.