With supplies still growing at “breakneck speed,” the global oil glut will continue though 2016 despite the strongest demand growth in five years, the International Energy Agency predicted Wednesday.

While output growth from countries outside OPEC has shrunk from 2014 highs and contributed to the 600,000 barrels a day fall in global supply in July, the IEA said, it is still running at about 1.2 million barrels a day above 2014 levels so far this year.

OPEC crude production held steady in July near a three-year high at 31.79 million barrels a day as record Iraqi production helped offset a pullback by Saudi Arabia.

“Global supply continues to grow at a breakneck pace,” the IEA said in its monthly oil market report.

Meanwhile, global oil demand in 2015 is expected to grow by 1.6 million barrels a day, up 0.2 million barrels a day from the IEA’s previous report in March and the fastest pace in five years, as economic growth solidifies and consumers respond to lower oil prices. Persistent macro-economic strength supports above-trend growth of 1.4 million barrels a day in 2016.

Supply outstripped consumption in the second quarter by 3 million barrels a day, the most since 1998.

“While a rebalancing has clearly begun, the process is likely to be prolonged as a supply overhang is expected to persist through 2016 — suggesting global inventories will pile up further,” the IEA said.

Bloomberg noted that supply could expand further after Iran reached an agreement with world powers on July 14 that will remove restrictions on its oil sales in return for curbing nuclear development.

Iran could lift production to 3.6 million barrels a day from about 2.9 million currently “within months” of international trade restraints being lifted, the IEA said.

“The IEA is turning more positive as they finally realize that demand will stay strong,” UBS analyst Giovanni Staunovo told Bloomberg. “We still need to work off the large excess in production, and that takes time, but the market is projected to be balanced in the second half of next year.”

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