A plan revealed by OPEC last week and allied oil producers to prop up crude prices could fall flat.

On Sunday, the International Energy Agency said deeper production cuts by the cartel and other major producers including Russia won't be enough to prevent a global supply glut.

Even if the countries adhere to the deal struck in Vienna and supply growth from other nations drops, there could still be a surplus of 700,000 barrels per day in the first quarter of next year, the agency said.

The Paris-based International Energy Agency kept its global oil demand growth forecasts unchanged for 2019 and 2020, at 1 million and 1.2 million barrels per day respectively.

"The market has done its own sums and the reaction to oil's new deal has so far been muted," the agency said in its monthly report for December.

The forecast does not bode well for Saudi Arabia's state oil giant, Saudi Aramco, which finalized its blockbuster IPO last week and will rely on the oil price to support its stock.

Saudi Aramco briefly became the world's first $2trillion company on Thursday, as its shares gained 10% for a second consecutive day in Riyadh.

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Sustaining production cuts

Saudi Arabia, OPEC's biggest producer by far, has been doing much of the heavy lifting to curtail supply since the group began limiting production in 2017. But prices have languished around $60 a barrel, prompting the producer group to act again.

Last week, OPEC and its allies agreed to cut oil production by an additional 500,000 barrels per day from January 1, bringing total output reductions to 1.7 million barrels daily.

UBS analysts expect the deal to be extended beyond its current expiration date in March.

Rolling it over to the rest of 2020 could address the supply surplus, but continued uncertainty over factors including surging US shale production are likely to keep Brent prices below $70 dollars per barrel, UBS said.

Production cuts that are too deep or too long risk reigniting non-OPEC investment, especially from the United States, perpetuating market instability, UBS said.

US oil production has more than doubled over the past decade, driven by the boom in shale production.

The United States was a net oil exporter for the first time in decades in September, the International Energy Agency said. That could become commonplace starting late next year or in early 2021, it added