The International Energy Agency (IEA) warned that a double-dip recession could reduce global energy demand enough to push global oil markets into surplus next year and could see oil prices decline further.
"Crude oil prices have plunged for the third time in three months," the IEA said, noting a drop of US$12-15 dollars a barrel in about 10 days, as it cut its demand forecast for this year.
The IEA indicated that the recent drop in international oil prices, down more than 12 per cent compared with the start of August, could have some way further to fall if developed economies do slip back into recession.
The International Energy Agency cut its estimate for global oil demand this year by 100,000 bpd because of a downward revision to demand in the second quarter, high prices and "slowing economic growth."
The IEA's new forecasts put demand this year at 89.5 million barrels per day, up 1.2 mbd or 1.4 percent from 2010, with 2012 rising to 91.9 mbd, up 1.6 mbd or 1.8 percent from this year.
The IEA warned against pre-emptive action from oil producers to defend high prices. "There is no justification at the present time for OPEC to think of substantially adjusting production downwards," said David Fyfe, head of the Oil Industry and Markets Division at the IEA.
OPEC members have so far made a "concerted effort" to keep the market well supplied, the IEA said in its monthly oil market report. Saudi Arabia raised production in July to its highest level in 30 years, as it filled the gap left by lost Libyan exports, it said.
