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Global oil demand to fall for the first time in 25 years

Daily Telegraph

The Opec oil cartel may be forced to cut production by as much as 3m barrels a day as global oil demand is set to contract for the first time since 1983 this year, the International Energy Agency (IEA) said. 

After record highs, the demand for oil is set to fall

After record highs, the demand for oil is set to fall Photo: PANKAJ NANGIA

The IEA, which advises 28 industrialised countries, said global consumption in 2008 will shrink by 200,000 barrels a day, or 0.2pc.

Demand has collapsed fastest in the developed countries of the Organisation for Economic Co-operation and Development (OECD), where the IEA estimates consumption has fallen by 3.3pc.

The IEA cut its estimate for 2008 by 350,000 barrels per day (bpd), or 0.4pc, to 85.8m bpd. The agency is still forecasting demand will recover in 2009, rising 0.5pc to 86.3m bpd, led by demand from developing countries, in particular China.

But the agency warned its forecast may have to change if the recession gets deeper: “Clearly, if we are now heading for a prolonged and global outright recession, then the 0.5pc global oil demand growth we now envisage for next year may not materialise,” the IEA said in its monthly report.

The IEA’s report shows reduced production will be required by Opec nations next year, at 30.7m bpd, versus 31.5m bpd in 2008

Opec is expected to cut output by at least 1m bpd when it meets in Algeria next week as the cartel attempts to increase prices which have fallen to about $44 a barrel – a drop of more than $100 from a record high of $147 in July.

Analysts have suggested Opec may eventually cut production by up to 3m bpd. The IEA said the cartel has so far only reduced production by half of its promised 2m bpd cut.

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