Global demand is forecast to be 30 percent higher by 2040, but still half as much as it would be without efficiency improvements.
IEA said that if current levels of OPEC production were maintained, the oil market would face a "difficult challenge" during the first quarter of 2018 on the back of supply exceeding demand by 600,000 bbl/day followed by another, smaller, surplus of 200,000 bbl/day in the second quarter of the year.
Under its "New Policies Scenario", based on existing legislation and announced policy intentions relative to emissions and climate change, the oil price should continue to rise towards $83 a barrel by the mid-2020s.
The Paris-based IEA cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.
Oil-dependent Venezuela's crude output dipped last month below 2 million barrels per day, its lowest level in almost three decades, global producer group Opec said on Monday.
The IEA also today released its latest World Energy Outlook, in which it said global oil demand will fall modestly due to the rise in electric cars.
The U.S. government said on Monday U.S. shale production in December would rise for a 12th consecutive month, increasing by 80,000 bpd.
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The rise marked the first time since 2004 that hate crime in the United States has increased two years in a row. Anti-Jewish bias was the motivation cited in a little more than half of the 1,273 religion-related hate crimes.
Oil prices held largely steady on Tuesday as the prospect of further rises in U.S. output offset some of the optimism that OPEC-led production cuts would tighten the balance between crude supply and demand. This latest move comes as investors expect figures to show USA oil production has risen.
Despite the cautious sentiment, traders said oil prices were unlikely to fall far, largely due to supply restrictions led by the Organization of the Petroleum Exporting Countries and Russian Federation, which have helped reduce excess stockpiles.
Some analysts even predict that with oil demand declining as EVs set to replace conventional fuel vehicles, oil price could plunge to as low as $10 a barrel over the next six to eight years.
If planned pipeline projects come to fruition, the United States and Canada combined could export more than 700,000 bpd to China by 2040 - a drop in the barrel in the country's 15.5 million bpd demand.
"Prices ... are starting to look like a pause or pullback is needed", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Geopolitical tension in the Middle East and intermittent supply outages in the likes of Nigeria and Iraq have pushed oil above $60 a barrel for the first time since 2015, while global inventories have fallen, prompting many market watchers to raise their price forecasts.