By IRNA,
Paris : With the effects of surging oil prices reverberating through the global economy – from airlines curtailing flights to Asian governments cutting fuel subsidies – the
International Energy Agency lowered its forecast for global oil demand this year, but just a bit.
Changes are happening in developed economies that will have an effect on demand, the agency, based in Paris, said in its monthly report, but they will “take time to filter through.”
The IEA forecast in its monthly Oil Market Report that global oil consumption would average 86.8 million barrels a day in 2008, or 70,000 barrels a day below the estimate that it made in its last report. Still, that would make overall demand 0.9 percent higher than in 2007.
The price of crude oil was falling Tuesday. Light sweet crude for July delivery was down $2.50, or 1.9 percent, at $131.85 a barrel on the New York Mercantile Exchange. Earlier it touched a session high of $ 137.98.
Traders attributed the volatility in part to the IEA report, which said China would continue to require more oil, and to a price estimate of $250 a barrel from Alexei Miller, chief executive of Gazprom, the Russian.
The IEA, meanwhile, warned against any fiscal moves by governments that would encourage the use of gas, like cutting taxes.
“Higher prices are needed to choke off demand to balance the market,” it said, adding that it would be the “worst response” to subsidize prices more, or in the case of OECD members, to cut taxes on fuel.
The IEA report also raised the possibility of a release of strategic stocks by OECD countries.
“The market can take comfort that the IEA is watching developments very closely and is prepared to act quickly if necessary,” it said.
The rising price of gasoline has also brought protests in Europe by groups like truckers and fishermen, who have been hit hard by the climb in prices. Some European politicians, like President Nicolas Sarkozy of France, have suggested lowering taxes on gas.