IEA boss: Oil price 'too low'

The price of oil has fallen too far in response to a decline in world demand for fuel, International Energy Agency (IEA) chief Nobuo Tanaka said.

"Sometimes the market is overshooting upwards and downwards, and this time this is definitely happening downwards," Tanaka, the IEA's executive director, told Reuters.

He did not say where oil prices should be.

The world's top oil exporter Saudi Arabia said on Saturday crude at $75 a barrel was "fair". Saudi Oil Minister Ali al-Naimi later said that oil at that level would encourage new output from marginal, higher cost-sources.

Tanaka also urged producing countries and international oil companies to pursue their planned projects to avoid a supply crunch in the mid-term when demand in recession-hit nations recovers.

Oil at current levels of about $46 a barrel should not deter Opec countries from developing new oilfields, Tanaka said.

Read more: Upstream Online