The Paris-based agency said that a massive increase in output means the U.S. will soon be producing more oil than Saudi Arabia. It could soon challenge Russia for the global crown.

"U.S. producers are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth," the IEA said in its latest monthly report. "This is a sobering thought for other producers."

The IEA said the surge, which is powered by shale, is "reminiscent" of 2014, when booming production in the U.S. prompted OPEC to flood the global market with oil in an attempt to protect its market share.

The strategy led to a price collapse that sent crude to a low of $27 per barrel in 2016 from well over $100.

Plunging prices forced some higher-cost U.S. producers to close up shop. But many emerged leaner and stronger than before.

OPEC and other major producers including Russia agreed to slash their output in late 2016 in order to reduce the glut and help boost prices. The agreement has been extended until the end of 2018.

But there are signs that the strategy may be losing its effectiveness.

Crude prices dropped 10% last week, falling below $60 a barrel for the first time this year. U.S. oil futures dropped 1.2% to trade at $58.62 on Tuesday.

The IEA did note two wild cards: The political crisis in Venezuela and a strengthening global economy, both of which could change market dynamics.

"Prices could be maintained at recent levels even as U.S. production rises," the agency said. "If so, most producers will be happy, but if not, history might be repeating itself."