It also added global crude supply could struggle to keep up with refining demand because of seasonal maintenance to North Sea production, Sudan's struggle to resume production, the annual hurricane season in the U.S. Gulf and risks to Middle Eastern output due to the Syrian civil war.
Shorter-than-expected crude supply and large refining volumes would undermine refining margins.
"While that would normally prompt refiners to drop their throughputs, market participants may not be equally receptive to such price signals. New refining capacity would likely be the last to cut back on runs if refining economics turned south," the IEA said.
"On the other hand, older plants in mature markets, saddled with comparatively high costs, might feel the heat. That those plants should find it increasingly tough to compete is a widely anticipated outcome of the current downstream restructuring," the IEA added.
Iran Exports Soar in May
The agency made little change to its global demand and supply forecasts for this year saying demand would remain sluggish.
Demand growth is expected to gain momentum through the year, rising from a low of 215,000 bpd year-on-year in the second quarter of 2013 to 1.1 million bpd or 1.2 percent year-on-year by the fourth quarter as the economy strengthens.
Annual global oil consumption is forecast to expand by 785,000 bpd in 2013, to 90.6 million bpd, roughly unchanged since last month's report.
"Relatively sluggish macroeconomic conditions are expected to keep a lid on growth in 2013, with absolute declines still projected across much of the OECD," the IEA said.
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Chinese oil demand is now forecast to grow by 3.8 percent, down from 3.9 percent previously.
On the supply front, the IEA said OPEC crude oil supply rose in May by 135,000 bpd to 30.89 million bpd, a sevenmonth high, due to higher output from Saudi Arabia, Iran, the UAE and Kuwait and despite lower production from Iraq, Libya and Nigeria.
It said OPEC would need to produce only 29.8 million bpd in the second half of 2013 to balance the market.
Iranian output was largely unchanged in May at 2.68 million bpd, imports of Iranian oil saw a steep spike in May to 1.39 million bpd from 835,000 in April, the IEA said citing a rise in supplies to China to 715,000 bpd in May from 370,000 bpd in April.
"The steep month-on-month change, however, largely reflects congestion at Chinese ports at end-April, with discharge from ships delayed until early May," it said.
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