That will push world average oil import prices up to $125 per barrel (in 2011 dollars) by 2035, from around $100 per barrel at present, but they could be much higher if Iraq fails to deliver on its production potential.

Iraq is set to become the second largest oil exporter by the 2030s, as it expands output to take advantage of demand from fast growing Asian economies.

New fuel economy standards in the U.S. and efforts by China, Japan and the European Union to reduce demand would help to make up for a disappointing decade for global energy efficiency.

"But even with these and other new policies in place, a significant share of the potential to improve energy efficiency -- four-fifths of the potential in the buildings sector and more than half in industry -- still remains untapped," the IEA stated.

Policymakers are still missing out on potential benefits for energy security, economic growth and the environment.

Growth in demand over the years to 2035 would be halved and oil demand would peak just before 2020, if governments took action to remove barriers preventing the implementation of energy efficiency measures that are already economically viable, the global organization said.