International Energy Agency (IEA) chief Fatih Birol said that oil prices may have bottomed out, providing that the health of the global economy does not pose a concern.

Oil prices hit 2016 highs with Brent crude reaching $48.50 a barrel on optimism that a global oil glut will ease. That, coupled with a weaker dollar, has helped lift crude futures by more than $20 a barrel since prices plumbed 12-year lows below $30 in the first quarter.

A decline in non-Opec production amounting to more than 700,000 barrels per day this year, and production outages such as in Nigeria and Kuwait, have driven the rally, Birol told Reuters on the sidelines of the Group of Seven energy ministers’ meeting in Kitakyushu, southwestern Japan.

Asked if oil prices had bottomed out, he said: "It may well be the case, but it will depend on how the global economy looks like. In a normal economic environment, we will see the price direction is rather upwards than downwards."

"We believe under normal conditions towards the end of this year, second half of this year but latest 2017, markets will rebalance."

Birol said he hopes to see a rebound in upstream oil investments next year, following a 40 per cent curb in investments over two years. Non-Opec output is set to fall by more than 700,000 barrels per day this year.