The International Monetary Fund has warned oil ministers that capacity expansion is failing to keep up with demand, the Financial Times reported Tuesday.
"While oil demand has remained robust, the supply side response to rising prices has been disappointing," the IMF's deputy director John Lipsky said at an oil conference in Rome, the FT reported.
He said the spare capacity held by the Organization of Petroleum Exporting Countries was around one quarter of its 2002 level and was expected to remain limited for some time.
"Against this background, increased investment in the oil sector has a crucial role to play in improving the supply-demand balance and bringing greater stability to the market," he told the conference.
During the weekend, Saudi Arabia's oil minister Ali Naimi said the kingdom had no plans to beef up its oil production capacity beyond the amount it is already pursuing for several years until it gets clearer signals about future crude consumption.
"All the latest projections, at least up to 2020, do not require anything higher," Naimi told trade journal Petroleum Argus in an interview. "Unless we see really genuine demand, we have to pause right now and see what happens," he said.