The oil market “could drown in oversupply” as Iran’s return offsets production cuts, paving the way for a further slide in prices, the world’s leading energy forecaster said on Tuesday. In a stark assessment of the oil market, the International Energy Agency warned of an oil overhang of at least 1m barrels a day for a third consecutive year in 2016. “There will be enormous strain on the ability of the oil system to absorb it efficiently,” the wealthy nations’ energy watchdog said in its closely watched monthly oil market report. Demand growth is set to moderate this year, while Opec production outweighs supply cuts outside of the producers’ group. If Iran can move quickly to offer its oil under attractive terms, oil prices may come under further pressure, the IEA said, particularly as other Middle East producers refuse to “stay on the sidelines”. In this scenario global oil supply could exceed demand by 1.5m b/d in the first half of 2016, the IEA said.