Oil markets look "adequately supplied for now" after a big increase in production over the last six months but the oil industry is coming under strain as it copes with increasing global demand, the West's energy watchdog said on Friday.
The International Energy Agency said in its monthly report that the world's spare oil production capacity was already down to only 2 per cent of global demand, with further reductions likely to come.
"This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy," the Paris-based IEA said.
Members of the Organization of the Petroleum Exporting Countries and other exporters such as Russia and US shale producers had increased oil production sharply since May, the IEA said, raising output by 1.4 million barrels per day (bpd).
Overall Opec had boosted production by 735,000 bpd since May as Middle East Gulf producers such as Saudi Arabia and the UAE more than compensated for declining output in Venezuela and Iran, which is facing US sanctions from next month.
And the outlook for world oil consumption was faltering.
The IEA cut its forecast of global oil demand growth by 0.11 million bpd for both this year and next to 1.28 million bpd and 1.36 million bpd respectively.
"This is due to a weaker economic outlook, trade concerns, high...