PARIS, Sept 11: The International Energy Agency on Wednesday held its 2002 and 2003 global oil demand growth forecasts steady, but noted that continued high oil prices could curb future demand and slow global economic recovery.

The Paris-based agency said in its monthly report for August published on Wednesday it still estimated demand growth this year of 220,000 bpd after revising its forecast 20 per cent lower in its report for July.

It also stood by its 2003 estimate of 1.1 million bpd for 2003 as it did in the previous report.

It noted that global oil production had fallen by 580,000 bpd in August from the figure for July to 76.1 million bpd.

The IEA said that while oil product stocks were in good shape, crude stocks were “low and are tending downwards. Production cuts have contributed to falling crude stocks, while reduced economic activity, and the impact of high oil prices on consumption have undermined product demand.”

The oil production of the 10 countries of the Organization of Petroleum Exporting Countries excluding Iraq reached 23.4 million bpd in August, 1.7 million bpd more than the output quotas the 11-member grouping has fixed for itself, the IEA said.

Including Iraq, Opec’s production fell by 250,000 bpd in August from July because a 20,000 bpd increase by the 10 Opec countries other than Iraq was not sufficient to make up for a fall of 270,000 bpd in Iraqi exports, the IEA explained.

Demand in countries in the Organization for Economic Cooperation and Development had contracted slower than expected during the first half of 2002, with Europe, Canada and the United States primarily responsible for boosting demand.

“August demand is expected to show the strongest year-on-year growth in a year” and it was likely to continue an upward trend, albeit slower due to a sluggish global economy, the report said.

The IEA said the rise in oil prices — where the benchmark Brent North Sea price hit $29 a barrel for the first time in nearly a year in London on Tuesday — was likely due to increased global tension.

“The rise in crude prices occurred during a period of sluggish product demand growth, poor refining margins, increased Opec non-compliance, and heightened risk of a ‘double dip’ recession,” the IEA said.

It added that analysts had attributed the high prices “to a ‘war premium’” amid rising tension over possible US military intervention against Iraq and its leader Saddam Hussein.—AFP