High oil prices are beginning to slow the world economy and encourage fuel efficiencies in China, the International Energy Agency said on Tuesday. The Paris-based agency said it had cut its forecast for world oil demand growth next year by 320,000 barrels a day to 1.45 million bpd for total world consumption of 83.85 million bpd. The projection marks a sharp fall from this year's growth of 2.71 million bpd, the biggest increase in petroleum demand in 24 years. "The cut reflects expectations of slower economic growth and the impact of high oil prices on demand and the economy," said the IEA, adviser on energy to 26 industrialised nations. Demand growth in 2004, led by China, has powered oil prices to all-time highs, taking U.S. crude close to $54 a barrel and London crude above $50.
The IEA raised its forecast for 2004 growth by 190,000 bpd to 2.71 million, partly to reflect a higher assumption about demand in Russia and its CIS neighbours. It said early indications were that Chinese growth slowed in August to an annual 6 percent from 12 percent in July and 25 percent in the second quarter. The forecast for Chinese demand growth in 2005 was reduced by 140,000 bpd to 360,000 bpd for a total 6.68 million bpd and down from 2004 growth of 800,000 bpd.///