Iranian oil exports are likely to fall by nearly half within six months, the IEA said Wednesday while holding its estimate of global oil demand steady for the first time in six months.
The report underscored two forces in the oil market, where prices have risen sharply, pushing up energy costs in many sectors.
These are the effect of EU sanctions against Iran and other disruptions to supply together with tighter market conditions.
For a long period the underlying tone of IEA monthly reports has been dominated by the outlook for slower economic growth, which weakened prospects for growth of oil demand.
The IEA said Wednesday that it expected Iranian exports to fall to about one million barrels per day (mb/d) after the middle of this year.
The International Energy Agency cited industry experts who were "expecting exports of Iranian crude to ultimately be curtailed by around 800 kb/d (thousand barrels per day) to 1.0 mb/d from mid-year onwards."
But the agency added in its monthly report that subdued economic activity and high prices would restrain upward pressure on consumption.
Overall, therefore, the IEA kept its 2012 forecast for growth in oil demand unchanged at 800 kb/d, the first time for six months that it has not reduced its estimation.
In absolute terms, global demand for oil this year was forecast at 89.9 mb/d, the agency said in its first report since Greece secured a rescue deal from public and private creditors, brightening prospects for the eurozone economy.
However, the IEA underscored "a heady brew of both real and anticipated supply-side risks, alongside a very evident tightening in actual market fundamentals that has been underway since mid 2010."
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While noting that "market attention has been focused on the potential disruption in Iranian crude flows in coming months as the EU's 1 July embargo nears," it highlighted other factors that were influencing global demand.
"More prosaic ongoing tightening the the supply/demand balance" had helped to raise prices by 20 percent since December," the report said.
Factors that curbed oil supplies included unexpected cuts in the North Sea and Canada, along with "geopolitical disputes in Africa and the Middle East."
But the agency said that "it seems appropriate to stand back and acknowledge a big picture that, arguably, explains more of the price strength seen in recent months than does ‘speculation' about real and perceived geopolitical risks."
The IEA said that supply from OPEC countries rose by 315 kb/d in February, "led by a three-decade peak in Saudi output and a sharp recovery in Libyan production."
Global refining levels were "largely unchanged," it added, with higher US output taking up slack seen elsewhere.
Industrial stocks held by OECD members grew by 13.6 million barrels to 2.614 billion.
The report was released days after eurozone finance ministers signed off on more aid for Greece, its second bail-out following a rescue package worth 110 billion euros ($144 billion) in May 2010.
In Asia, oil prices were mixed in afternoon trading as upbeat economic data and Middle East tensions supported markets while investors took profits from recent gains, analysts said.
New York's main contract, light sweet crude for delivery in April was up a cent to $106.72 while Brent North Sea crude for April delivery shed nine cents to $126.13.
"The market still remains quite bullish overall, supported by optimism about the world economy," said Justin Harper, market strategist at IG Markets Singapore.
In January, The International Monetary Fund forecast global economic growth of 3.3 percent this year, down from 3.8 percent in 2011 and 5.2 percent in 2010.