Paris: The forecast surge of global demand for oil could ease sharply this year on a "dramatic" slowing of the US economy but prices may stay high because of globalisation, the International Energy Agency said today.

As oil market prices hover near a record around US $ 110 a barrel, the IEA said there were clear signs that emerging countries, led by China, had de-linked from the engine of the US economy because their trade flows had changed.

Its revised data even showed a small increase in the rate of growth of global demand for oil this year over the 2007 level.

Growth forecasts by the International Monetary Fund for emerging economies such as China or Brazil had been revised down by only small amounts. "This suggests that the case for decoupling has some merits," the IEA said in its April report.

"For the first time, a sharp US economic downturn is not expected to cause such significant impact in key emerging economies as in the past."

The report also warned that oil "supply-side risks, stemming from above-ground and geopolitical issues, also remain critical."

Such risks were evident in "a spate of disruptions in recent weeks, pipeline sabotage in Nigeria and Iraq and a strike in Gabon" and together, "illustrate the potential for downside supply risks."

Flows of money from investment funds into oil, in part as a response to the fall of the dollar, the so-called "weight of money" effect, had also pushed up prices, but to what extent was unclear, the International Energy Agency said.
Source : PTI