The eurozone debt crisis is cooling the global oil market rapidly but likely sanctions against Iran are holding prices up for now, the IEA said on Tuesday.
The International Energy Agency again cut its forecast for growth of global demand for this year and next, sharply by about 200,000 barrels per day.
And the agency said that the medium-term outlook was "more comfortable" than forecast six months ago.
With global economic growth now looking one third weaker than in the IEA's mainstream estimate six months ago, growth of demand for oil would be a more modest 700,000 barrels per day per year.
Assuming that the growth of production capacity continued, this "leaves the world with 6-8 million barrels per day of spare capacity during 2013-2016.
"Greater supply side flexibility is welcome, although it would be a pity for it to come about largely because of suppressed economic activity," the IEA, which is the energy monitoring and policy forum of the OECD, said in its monthly review.
Oil prices had firmed in November and the beginning of December because of strong seasonal demand in the approach to the northern hemisphere winter and owing to tight supplies.
"Bullish impetus also came from news of a potential EU ban on Iranian crude imports. These factors outweighed escalating economic risks."
The IEA commented: "Recent months have seen a definite deterioration in the economic outlook for Europe, and accordingly the world."