Saudi Arabia's energy minister, Khalid al-Falih, said Monday that tight spare capacity in the oil sector was a concern at a time when the market was witnessing healthy demand.
"We are concerned about tight spare capacity nowadays," Falih told reporters in Tokyo. "We are watching investment levels very closely to make sure that we have a pipeline of project flows sufficient to meet the incremental demand that is very healthy," he added.
The International Energy Agency said in its oil market report in April that OECD oil stocks fell by a larger-than-normal 25.6 million barrels in February to within just 30 million barrels of their five-year average, the key metric to gage the success of OPEC-led output cuts.
As of February, OECD oil stocks have now fallen for six of the last seven months and have fallen sharply compared with their five-year average, the key metric being used by OPEC to measure the success of its output cuts.
"I think we will have to wait until June," Falih said. "At that time we will determine what a target is, what are metrics are."
The agreement, which commits the organization and 10 non-OPEC allies led by Russia to 1.8 million b/d in cuts, runs through the end of 2018, although several members have suggested the cuts could be prolonged as part of a more permanent market management deal. OPEC's next ministerial meeting is on June 22 in Vienna.
Falih said the aim was to ensure stability in the oil market.
"For sure we are not targeting the price. Our objective is always to bring stability, rebalancing ... to the oil market. We want to see a healthy industry. We want to see stability in the short term, mid-term and long term. And long term will require investment," he added.
Falih said that the oil industry is "better shaped" today than before the production cut deal was put in place, but he added: "We certainly do not feel we are where we need to be [for] complete market stability."
