FXStreet (Mumbai) - Oil prices rose more than 3 per cent today after data revealed that Chinese oil demand was likely hit a record high in 2015. Brent crude futures moved up 3.7 per cent, trading at $29.61 a barrel by 7.55 a.m. ET. U.S. crude prices increased 30 cents at $29.72 a barrel. Contracts however remained near 12-year lows as the International Energy Agency once again flagged over supply concerns for 2016. According to the IEA, though oil prices showed slight improvement it continued to remain near 12-year lows on glut worries. the IEA reportedly said "While the pace of stock building eases in the second half of the year as supply from non-OPEC producers falls, unless something changes, the oil market could drown in oversupply”. On one hand where supply is at its peak, demand on the other is estimated to fall this year. IEA noted oil demand fell to a one-year low in the fourth quarter of 2015. The agency also warned that the situation will worsen once Iran beginning to export oil following the lifting of Western sanctions. Iran said it would increase oil output by 500,000 bpd. Iran used to export 2.3 million barrels a day. The sanctions had slashed Iran’s export by 2 million barrels per day (bpd), reducing to around 1 million bpd. With sanctions removed Iran’s oil exports will climb again to its pre sanction highs choking a market already hit by glut concerns. Iran’s deputy oil minister, Roknoddin Javadi’s comments show Iran’s determination to take back its lost market share. Following Iran’s statement yesterday, oil slipped to 13 year low falling below $28 per barrel. The increase in output will support Iran’s economy. Credit rating agency, Moody's noted that lifting of sanctions will boost liquidity and economic growth in Iran. According to the agency, Iran's increased oil production would "contribute to higher growth". There will also be a rise in investment and consumption spending. Increased oil production will help Iran achieve economic growth of 4 per cent to 5.5 per cent in 2016 and 2017. However, it remains to be seen how quickly Iran can revamp infrastructure which has been hurt by years of low investment. Some traders it will be some time before Iran starts increasing oil output by 500,000 bpd. UAE’s energy minister acknowledged that any extra supply of crude oil would "harm the market". Suhail bin Mohammed al-Mazroui added any the additional production and inflow of oil would lengthen the time required by the market to rebalance itself, He said via Al-Jazeera "... Does Iran have the right to do so? Yes of course; they are a member of OPEC and are entitled to that ... but is this going to help [the] situation? No," he said. Yesterday OPEC showed some optimism saying that oil price would rebound in the latter half of 2016. According to OPEC, non-OPEC countries would have to cut production by ear end which would reduce supply and in the process boost price. For more information, read our latest forex news.