Saudi Arabia said that the oil market was oversupplied and revealed last month that the kingdom had slashed its March output by some 700,000 bpd, Saudi Arabias oil minister Ali al-Naimi announced.
The news surprised some people as previous comments by Saudi had suggested that they would meet the supply shortfall created by the halt of oil production in Libya due to the civil war.
Naimi stated that Saudi had cut production from 9.1 mn bpd in February to 8.29mn bpd in March.
"The market is overbalanced. In April we don't know yet, probably a little higher than March. The reason I gave you these numbers is to show you that the market is oversupplied," Naimi was quoted by Bloomberg as saying.
Oil Ministers from Kuwait and the United Arab Emirates echoed Naimi's concerns about oversupply and said rising crude prices were out of the hands of OPEC, which next meets in June.
Saudi's oil minister who has previously spoken of US$70 to US$80 a barrel as a desirable range for crude, declined to comment on the price.
Naimi's words are the clearest indication yet that OPEC is unconvinced there is a need for more oil despite the civil war that has slashed Libyan output and expectations that Japanese demand will rise as it scrambles to rebuild its earthquake-shattered electricity grid.
Naimi reaffirmed that Saudi output capacity stood at 12.5mn bpd which gives it roughly 3.5mn bpd of spare capacity which could be brought to market if global demand warrants it.
Nobuo Tanaka, the head of the International Energy Agency, stopped short of saying OPEC needed to boost output, but suggested the group be more flexible in its thinking about supply.
"The market is getting tighter and if it is tighter the price may go up, which may have a negative impact to economic growth," Tanaka was quoted by Reuters as saying.
