The IEA said it expected U.S. oil production to bear the brunt of a decline in oil prices.
"After expanding by a record 1.7 million barrels a day in 2014, the latest price rout could stop U.S. growth in its tracks," the IEA said. "A sharp decline is already underway, with annual gains shrinking from more than 1 million barrels a day at the start of 2015 to roughly half that level by July."
At the pump
The IEA added lower oil prices were helping boost demand for oil. It said global oil demand is expected to reach a five-year high of 1.7 million barrels a day this year, before moderating to 1.4 million barrels in 2016, which would still be above trend.
"U.S. motorists are taking to the roads, propelling domestic gasoline demand to an eight-year high." the IEA said. It expected China, the world's second largest oil consumer, to keep up its crude purchases despite the recent stock market collapse, currency devaluation and weak economic data.
Pain for OPEC
Despite the sharp fall in oil prices, OPEC and non-OPEC producers have refused to cut back on oil production in order to defend their market share.