Iran's Organization of Petroleum Exporting Countries governor said a continued rise in global oil inventories amidst declining crude demand could warrant further production cuts by producers, and more time is needed for oil to rise to the $70 to $100 a barrel level.
"When you see the (oil) stocks building rapidly it means there is a surplus in the market that needs to be balanced," Mohammad Ali Khatibi told Dow Jones Newswires by telephone late Monday.
"It gives you a feeling ... that the market is an oversupplied market and if the supplier wanted to balance the market, it should cut," Khatibi said.
Weakening demand in the U.S. and western Europe has pushed millions of barrels of oil into storage terminals and onto tankers offshore.
Oil inventories in the U.S., which rose an additional 6.2 million barrels in the week ending Jan. 23, have increased for seven of the last eight weeks -- almost filling tanks to capacity at Cushing, Oklahoma, the Nymex contract delivery point.
In a bid to restrain a more than $100 decline in oil prices, OPEC announced three production cuts since September, to take a total 4.2 million barrels a day of crude oil out of the market. The latest reduction of 2.2 million barrels per day -- announced at a Dec. 17 meeting in Algeria -- came into effect on Jan. 1.
"The OPEC cut was huge, but the figure for shrinking oil demand was also huge," Khatibi said, adding that in the wake of declining demand and rising inventories further cuts could be warranted.