(Ecofin Agency) - The International Energy Agency has said that the oversupply in the global market will continue into 2017, restricting any chance of a price recovery in the short term.

According to the agency U.S. shale oil output will drawback this year and in 2017, as the price drop affects drilling. The Organization of Petroleum Exporting Countries (OPEC) will increase its market share a little with Iran, replace Iraq as the group’s largest contributor to supply growth.

“Only in 2017 will we finally see oil supply and demand aligned but the enormous stocks being accumulated will act as a dampener on the pace of recovery in oil prices. It is hard to see oil prices recovering significantly in the short term from the low levels prevailing” IEA said.

The agency added that while OPEC will be successful in its policy of protecting market share, it will have to bear an extended period of low revenues.

Oil futures have dropped by 42% in the previous year as the excess was extended by strong U.S. crude output, bigger supply from major OPEC members as well as reducing economic growth in China. After a 12-year drop near $27 in late January, Brent crude neared $34 per barrel on Monday, Worldoil reports.

Anita Fatunji