Tension between Iran and the West is likely to keep oil prices high despite a dramatic improvement in world supply and a big build in stocks, the International Energy Agency (IEA) said on Friday.
The agency, which advises 28 industrialised nations on energy policy, said soaring global oil supply from OPEC countries and the United States far outpaced global demand, curbed by poor economic activity in developed nations.
The agency said global oil supply rose 600,000 barrels per day (bpd) to 91 million bpd in April and was now 3.9 million bpd over year ago levels, with 90 percent of the increase coming from OPEC.
Saudi Arabia has said it pumped 10.1 million bpd last month, its highest for more than 30 years, in a bid to meet growing demand and curb oil prices, which hit a three-and-a-half-year high in March.
But the IEA said in its monthly Oil Market Report that uncertainty remained and the agency, which last year released strategic oil stocks to compensate for the outage of Libyan production, would be ready to act if necessary.
"The path of market fundamentals for the rest of the year remains highly uncertain and geopolitical risks will likely continue to keep prices high," the IEA said.
"The IEA will monitor market conditions and stands ready to act if supply conditions warrant it."
The agency kept its forecast for global oil demand growth this year broadly unchanged, raising it by just 20,000 bpd from its previous report to 790,000 bpd.
This would bring global oil consumption this year to around 90 million bpd, it said.
World oil supply was likely to more than match the increase in demand, the IEA said. OPEC oil supply had risen by 410,000 bpd in April, with Iraq, Nigeria and Libya providing 85 per cent of the increase, well ahead of demand for OPEC oil.
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