Supply disruptions in Iraq, uncertainty over the fate of Russia's top producer Yukos, and rising demand in China have pushed oil prices to record highs recently. Still, the agency report published Wednesday attempted to dampen concerns that oil is in short supply by pointing to rising production in Saudi Arabia and Russia.

"The market is tight, production and infrastructure capacity is less than desired and uncertainties continue to weigh on the market," the report said. "But does this justify $45 oil? Current oil prices are a concern and are causing economic damage."

In an effort to calm jumpy markets, Saudi Arabia, the world's largest oil exporter, said Wednesday it had 1.3 million barrels of idle capacity that could be used to meet demand. Saudi Arabia currently produces 9.5 million barrels a day, according to the energy agency.

"The kingdom is well prepared to meet all the requirements of the international oil companies if they need additional volumes, relying on its surplus production capacity of more than 1.3 million barrels daily, which could be used immediately if required," Ali al-Naimi, the Saudi oil minister, said in a statement distributed by the Saudi Press Agency.

"The Saudis are trying to calm the market now and said they're ready to provide the barrels needed," said Lawrence Goldstein, president of the New York-based Petroleum Industry Research Foundation. "That's a welcome comment."

In New York, crude oil for September delivery rose 28 cents to $44.80 on Wednesday. The contract is up 37 percent this year and hit a record of $44.98 on Tuesday, its highest price since futures began trading in New York in 1983. The Saudi announcement coincided with a report from the U.S. Energy Information Administration that showed that U.S. oil stocks had dropped unexpectedly last week as imports shrank. Gasoline stocks also fell.

The International Energy Agency sees global oil demand at 82.2 million barrels a day in 2004 and 84 million barrels a day in 2005, up about 730,000 barrels per day from previous estimates.

The agency's new figures recognize demand that had been previously underestimated, Klaus Rehaag, the author of the agency's monthly oil market report, said in a telephone interview. World oil demand will increase by 1.8 million barrels in 2005, after a record gain of 2.5 million barrels a day this year, the agency said.

"The IEA has finally come around to the realization that global oil demand is strong and rising, fueled by a recovering global economy," Goldstein said. Demand from China, which has been growing at a "sizzling" rate since the second half of 2003, may slow down in the second half of this year, the IEA said, as steps taken by China to prevent the economy from overheating start to have an impact, the report said.

The Organization of the Petroleum Exporting Countries, which produces a third of the world's oil, is close to full production capacity.

The IEA found that "effective" spare capacity within OPEC was down to 500,000 barrels a day. The estimate excludes countries like Iraq, Venezuela, Nigeria and Indonesia, which cannot raise production because of disruptions, strikes or civil unrest. OPEC's total spare capacity stands at 1.2 million barrels a day, according to the agency. That spare capacity, which usually can be used to increase production when demand grows, has been below 2 million barrels a day since February 2003. During 2002, OPEC could rely on as much as 7 million barrels a day.

"I basically don't think there is any spare capacity left," said Adam Sieminski, a global oil strategist at Deutsche Bank in London. "If you have a hiccup anywhere in the world, you can have prices well above $50 or more.

Oil traders have had to contend with often-contradictory news coming from major oil producers. Yukos, which produces 2 percent of the world's oil and is under investigation for tax fraud, warned last month that it would shut down production. Hours later, the information was denied by Russian authorities. In Iraq, exports from the country's northern pipeline through Turkey are at a standstill, and the government cut shipments through the Gulf on Tuesday after it was warned of possible attacks. OPEC has raised its production ceiling twice after meeting in Beirut in June. Still OPEC's current output is higher than the organization's largely symbolic target of 26 million barrels a day.

OPEC's 11 members produced 29.1 million barrels a day on average last month. Excluding Iraq, whose production has been disrupted by the armed insurgency, OPEC's production was 27.1 million barrels a day in July, up 145,000 barrels a day from the previous month.

The group is scheduled to meet Sept. 15 in Vienna. But analysts say there is not much the organization can do to help push prices down.

Meanwhile, supply rose by 550,000 barrels a day in July to 83.5 million barrels a day, as stocks were filled, the IEA said. More oil should be coming on the market by the end of the year, including an additional 1.2 million barrels a day from non-OPEC producers, such as fields in the North Sea, and 400,000 barrels a day from OPEC countries.

The IEA, an independent body founded 30 years ago by major oil- consuming nations after the Arab oil embargo, pointed out that industrialized nations have vast quantities of oil they keep for emergencies. IEA member countries have more than 1.4 billion barrels of strategic stocks available, according to the report. Strategic stocks have not been tapped since 1991, after Iraq invaded Kuwait.