Falling oil demand worries Saudis most

As the world's oil producers wring their hands over a global glut that is pushing down prices, evidence is mounting that Saudi Arabia is more concerned about shrinking demand.

The world's largest exporter had chosen not to cut production and was instead counting on lower prices to stimulate consumption, said Mohammad Al Sabban, an adviser to Saudi Arabia's petroleum minister from 1988 to 2013.

The Saudis are keeping an eye on investments in fuel efficiency and renewable energy, according to Francisco Blanch, Bank of America's head of global commodity research.

"Nobody should imagine the world will continue to demand oil as long as you have it in your fields," Al Sabban said. "We need to prepare ourselves for that stage."

The US shale revolution showed that forecasts of dwindling world oil supply were premature. It also gave credence to the old adage, attributed to a Saudi oil minister more than 30 years ago, that the Stone Age did not end because of the lack of stone. With costs falling for clean energy and international attention focused on slowing climate change, the Saudis are more worried that the world is inching closer to peak demand.

Among industrialised countries, that peak was reached 10 years ago, according to the Paris-based International Energy Agency, and fast-developing countries such as India and China would not become as carbon-intensive, Al Sabban said.