Oil prices have risen about 60 percent since past year after the Organization of Petroleum Exporting Countries and other oil producers, including Russian Federation, began reducing output to cut excess supply, Reuters reported.
Oil prices are set, for the most part, by Saudi Arabia and, to a lesser extent, it's OPEC partners.
Since early 2017, OPEC and other oil-producing countries have agreed to reduce supply in a bid to bolster oil prices.
"The United States shows by far the biggest gain (about 75 percent of the total across 2018 and 2019), but recently this expansion has not been without stress", the report said, referring to a gap in recent weeks between the USA and European oil futures contracts.
Although Saudi Arabia has benefited from oil's rally over the last two years, the government relies on a strong security relationship with the USA, giving Washington some influence in the debate over OPEC policy.
Even if the supply gap, triggered by the return of United States sanctions on Iran and a major political crisis in Venezuela, is plugged, the oil market will likely remain vulnerable to disruption next year, the IEA warned.More news: You Can Do It! Skyscraper-Climbing US Raccoon Transfixes Twitter
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"The prospect of easing supply curbs from OPEC-led producers continues to be reflected in oil's overall depressed price", said Lukman Otunuga, analyst at futures brokerage FXTM. "Put the exports of crude on top of that, and it's just a really bullish report".
The full organization, plus non-members like Russian Federation who agreed to take part in the earlier round of production cuts, are meeting June 22 and 23 in Vienna. Prices have risen around 60 per cent over the a year ago.
With output in Russian Federation rising back above 11 million bpd in June and Saudi production climbing back above 10 million bpd, supplies from the top three producers are increasing. "Unofficial sources have said Russian Federation will propose to return production back to the October 2016 (level), i.e. removing the cap altogether over a period of three months".
The IEA meanwhile warned that whatever the outcome of the meeting, "the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption". American oil production has jumped by nearly a third in the last two years to a record 10.8 million barrels per day.
"Prices will be above $150 in less than two years", he tweeted on Wednesday.