According to the West's energy watchdog, Global oil demand growth will fall next year below already very weak levels of 2012 due to a slowdown in economic activity.

The outlook by the International Energy Agency echoes similar pessimistic forecasts revealed this week by the US government and the Opec.

The IEA also said oil prices may remain elevated in the next few months as geopolitical tensions including a stand off between the West and Iran over Tehran's nuclear program offset the bearish impact of the weaker global economy.

The IEA said that the geopolitical dimension is likely to continue to provide something of a floor for prices. The issue of Iran will likely continue to weigh heavy on the market through the H2 of 2012. Moreover, there is a risk that recent progress in restoring output from Libya, Iraq and Nigeria could be jeopardized if recent political and civil tensions worsen.

Oil prices have plunged below USD 90 per barrel in June after Saudi Arabia stepped in to raise production to multi year highs at a time when Iranian exports plunged because of Western sanctions. Prices have recovered to above USD 110 per barrel in August supported by Iranian tensions and investors' hopes for new money printing programs from global central banks to support the flagging economy.

Source - Reuters

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