Oil price is expected to reach around $80 per barrel by 2020, as the market significantly rebalances by supporting higher demand and lower growth in supply.
The IEA estimates that oil prices will only rebound only slowly and intermittently.
The report also revealed that that dependency on oil exports from Middle East would eventually escalate to the 1970s level.
This kind of concentration of global supply would increase concerns about energy security, with Asian consumers such as India and China being especially vulnerable.
By 2040, China’s net oil imports will be almost five times those of the US and India is expected to exceed that of the EU.
IEA executive director Fatih Birol said: "It would be a grave mistake to index our attention to energy security to changes in the oil price.
"Quite the opposite: a period of low oil prices is the moment to reinforce our capacity to deal with future energy security threats."
In the report, IEA also stated that overall, world energy demand is likely to grow nearly one-third between 2013 and 2040.
The links between global economic growth, energy demand and energy-related emissions will weaken as some markets such as China may see structural change in their economies while others would hit a saturation point in demand for energy services.
Before the crucial COP21 climate summit in Paris, there are clear indications that an energy transition is underway: renewables contributed almost 50% of the global new power generation capacity in 2014 and have become the second-largest source of power following coal.
Renewables will overtake coal as the largest source of power generation by the early-2030s and renewables-based generation will reach 50% in the EU by 2040, around 30% in China and Japan, and above 25% in the US and India.
Although the net result of the changes is that growth in energy-related emissions will slow dramatically, the emissions trajectory implies a long-term temperature increase of 2.7 °C by 2100.
Correction is therefore required to achieve the world’s agreed climate goal.
Dr Birol added: "As the largest source of global greenhouse-gas emissions, the energy sector must be at the heart of global action to tackle climate change.
"World leaders meeting in Paris must set a clear direction for the accelerated transformation of the global energy sector."
Image: World energy demand is expected to grow nearly one-third between 2013 and 2040. Photo: courtesy of Stuart Miles/FreeDigitalPhotos.net.
