The International Energy Agency said that World oil demand will rise less than expected in 2008 because of slower economic growth in the United States and other industrialized countries.

IEA in its monthly Oil Market Report said that global consumption will rise by 1.27 million barrels per day, 460,000 barrels per day less than the previous forecast.

The assessment follows the latest outlook from the International Monetary Fund, which this week issued lower economic growth forecasts. Growth in top oil consumer the US this year was cut to 0.5% from 1.5%

'The latest GDP projections from the IMF suggest that less robust oil demand growth in the coming months. This report projects April and May oil balances tipping towards a supply surplus.

Lower demand in members of the Organization for Economic Co operation and Development accounted for the bulk of the revision. The IEA cut expected OECD demand this year by 320,000 bpd to 48.9 million bpd.

The agency also trimmed its forecast for 2008 demand in China, the world's second largest oil consumer, by 70,000 barrels per day partly due to weather related effects in the first quarter.

The reduction brings the IEA's global demand forecast closer to that of the Organisation of the Petroleum Exporting Countries, which expects growth of 1.2 million bpd this year. But the IEA said that weaker demand might not translate into lower oil prices given supply risks in countries such as Nigeria and Iraq.