The IEA attributes the decline to higher prices that are expected to dampen demand.
So far this year, China has lived up to these expectations. Tehran is mounting a last-ditch effort to save a 2015 nuclear deal that Washington has abandoned, with plans to impose unilateral sanctions including strict curbs on Iran's oil exports.
US West Texas Intermediate (WTI) crude futures were at $71.68 a barrel, up 19 cents, or 0.3%, from their last settlement. China's crude oil imports in the first quarter increased by 7 percent on the year to around 9.09 million bpd-a rise of nearly 595,000 bpd on average compared to Q1 2017, according to Reuters calculations.
China's foreign ministry said last week it regretted the USA decision and called for parties involved to stick to diplomatic approaches to stay on track for full implementation of the 2015 accord. Crude oil production in March was around 3.76 million bpd, flat compared with the average levels in January and February. The demand for OPEC's crude for 2018 is 32.7 Mbd, based on the cartel's estimates, but current production is lower at 31.9 Mbd-bringing the deficit to about 800,000 b/d. Steady refining margins and backlog cargoes to some independent refiners contributed to the record import volumes.
"Barring a move by the OPEC/non-OPEC coalition, it is hard to argue how prices could weaken on a sustained basis, with price action in fact still pointing to more gains to come."
Thomas Tuchel confirmed as PSG boss
Unai Emery managed his final game in charge of the club on Saturday evening, as the club claimed the domestic treble this term. Emery, who on Sunday was named as France's coach of the year, will lead the side for the last time against Caen this weekend.
"Any reduction in Iranian supply will likely exacerbate market deficits, suggesting upward pressure on pricing", wrote Greg Sharenow, PIMCO commodities portfolio manager, which sees oil surpassing $80 in the short term.
Brent crude has been rising in recent months as supplies tighten and the decision by Donald Trump to pull out of an worldwide nuclear deal with Tehran has added to the upward pressure.
"It is too soon to say what will happen this time, but we should examine whether other producers could step in to ensure an orderly flow of oil to the market and offset a disruption to Iranian exports", the agency stated.
Geopolitical issues are drawing the market focus away from more fundamental issues like supply and demand metrics, the International Energy Agency said.
Despite these downward forces, the market retains support from OPEC and other producers' production cuts and USA sanctions on Iran.
"While recent data confirms strong growth in the first quarter 2018 and the start of the second quarter, we expect a slowdown in 2H18 largely attributable to higher oil prices".