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"While festering conflicts in Iraq and Libya show no sign of abating, their effect on global oil market balances and prices remains muted amid weakening oil demand growth and plentiful supply," it said in the report.
"U.S. production continues to surge, and OPEC (Organization of the Petroleum Exporting Countries) output remains above the group's official 30 million b/d supply target."
The euro zone was singled out for particular attention, with the IEA saying that the "macroeconomic malaise" experienced across much of Europe has been the dominant downside influence in terms of global demand. Euro zone economies are getting perilously close to deflation, it said, where consumer prices stop growing and instead start falling.
Read MoreChoking on oversupply, oil could fall another 10 percent
"The risk being that falling European prices trigger a deflationary spiral that causes further reductions in economic activity, as market participants delay investment/purchasing decisions, which in‐turn curb production and overall economic output," it said.
Brent crude, the international benchmark, fell through $100 for the first time in 16 months Monday, and was trading at $97.65 on Thursday morning. West Texas Intermediate is also under pressure, falling to $91.45 per barrel on Monday, trading near levels not seen since May 2013.