U.S. shale oil producers will increase their output if oil prices hit $60 a barrel, meaning OPEC will have to walk a fine line if it curtails production to prop up prices, the head of the International Energy Agency (IEA) said.

OPEC members are due to meet in Vienna at the end of the month to push through the first output limiting deal since 2008.

"If this decision pushes the prices up (to) around $60 dollars, we may well see a significant increase from shale oil from the U.S.," Fatih Birol told Reuters on Wednesday.

He said this level would be enough for many U.S. shale companies to restart stalled production, although it would take around nine months for the new supply to reach the market.

Low prices have led to two consecutive years of falling investment in upstream oil and gas investments, a pattern Birol expects to continue in 2017.

This, he said, could lead to tighter oil supply and price spikes in the future.

"We are entering a period of greater oil price volatility and the companies, organizations and countries should prepare themselves accordingly," he said.