Oil dominated the discussion at World Economic Forum in Davos, Switzerland. Bloomberg Television interviewed IHS Vice Chairman Dr. Daniel Yergin who shared histhoughts on this "historic time" in oil markets, when prices may begin to rebalance, and Saudi Arabia's strategy on a possible Saudi Aramco IPO. Below is a transcript of the interview. (Video courtesy of Bloomberg.)

TOM KEENE, BLOOMBERG NEWS: Years ago you said $40 a barrel. Nobody believed you. You were way out front on lower oil prices. Citigroup lowers its terminal value down near $40 and barrel. How do you know when you have found the bottom in oil?

DR. DANIEL YERGIN: I think we’re still seeing there. It’s amazing here at Davos, it was going to be about the fourth industrial revolution and robots, and the markets and oil have just taken over because it’s so dramatic. So I think this is a really historic time. That chart you showed is powerful. If you look without correcting for inflation at oil prices and all commodities and you take it back, we’re back in 2003. The super cycle is over. That incredible boom in the Chinese economy, two and a half times bigger—we’re back to 2003.

KEENE: Which geopolitical instability, which country are you more focused on?

YERGIN: Iraq is in terrible shape, but three or four of them – obviously you put Venezuela there – those are two of the top. This is knocking out so many countries.

FRANCINE LACQUA, BLOOMBERG NEWS: Russia is not doing great, either; we touched a record low for the Ruble today.

YERGIN: Russia for a while seemed to be OK, we got it under control, but this is another wallop.

LACQUA: When will markets rebalance? Oil markets – I know there is an oversupply issue, I know it’s difficult to call, but people want to know when we will call it bottom, is it six months away or 12 months?

YERGIN: Because producers show no inclination to get together. Other crises like this they have come together, but because of geopolitics they’re not. We think in the second half of the year this is so severe that you start to see a rebalancing of the market. Maybe the beginning of 2017, but in that period.

KEENE: Does the rebalancing come on balance sheets? The Suncor transaction announced this week in Canada with oil there, much, much cheaper than the global price. When you say rebalancing, what do you mean by that?

YERGIN: In other words, we get out of this downward pressure on price, and price starts to move up, and in the second half of the year we could see prices a good deal higher than they are today. Not what would have been $100, not $70, not $60, but a market that is coming back to operate more with the fundamental supply and demand being in balance.

LACQUA: This is what OPEC, OPEC needs to meet in the summer?

YERGIN: I think with OPEC the problem is that this time, because this is actually a geopolitical problem, too, which is that Saudi Arabia and Iran are basically at odds. Saudi Arabia is saying, we are not going to make room for Iranian oil, Iran says we want our market share back, and there’s a rivalry in the region. So you do not see a basis for them to get together unless -- and this is what the gulf countries say, everybody including the Russians, cut.

KEENE: Comment on a new Saudi Arabia. In your book, The Prize, you cover the majesty of the finding of oil all through the Middle East. There is no majesty now. There is a 29-year-old or a 30-year-old Deputy Governor, who’s new --

YERGIN: Deputy Crown Prince.

KEENE: Deputy Crown Prince, excuse me. But it’s a new regime if you will, a new way in Saudi Arabia. What does that mean?

YERGIN: I think, you, know, it’s still, a map where they say they want to diversify away from oil, it’s very hard in that economy. It’s so overwhelming, but it reflects the fact that 70% of the population is 30 or under, so it is a generational shift going on there, and a lot of activity, including a war in Yemen.

LACQUA: What does the Saudi Aramco IPO tell us about the kingdom? It a panic, or are they just thinking about the future?

YERGIN: Well I think they’re thinking about the future. I think the talk about the IPO, it’s going to take a while to get there.

LACQUA: Is it prompted by oil prices?

YERGIN: I think it is prompted by a sense of kind of reform, looking at what other countries have done, but it is a signal rather than them saying that there’s a specific timed event.