A combination of high oil prices and slower economic growth has stalled the rise in global oil demand, with the level at a zero increase in June, according to the International Energy Agency (IEA). Saudi production was at a 30-year high in July.

The Paris-based energy watchdog of 28 industrialised countries including Ireland, issued its monthly oil market report today which shows a sharp slowdown in demand and an increase in supply.

Saudi Arabia, the world's biggest producer, raised its output by a further 100,000 barrels per day to hit 9.8m b/d in July, the highest level for 30 years. The kingdom has now raised production by 1.1m b/d since January, meaning that Opec, the oil cartel, has fully compensated for the loss of Libyan output.

High prices have helped to cause absolute falls in consumption. Total demand for oil products in Asia dropped by 500,000 b/d between May and June, dipping from 20.6m b/d to 20.1m b/d.

Highlights of IEA's Oil Market Report

Marker crude prices have lost $12-$15/bbl since early-August amid growing concerns over government debt and the likely impact on the global economy. At writing, Brent and WTI futures stood at $103/bbl and $80/bbl respectively. This follows July's relative calm, when crude rose by $1-$3/bbl, accompanied by modest gains in refining margins.

Global 2011 oil demand is trimmed by 0.1 mb/d (million barrels per day) on weaker baseline and 2Q11 data, high prices and slowing economic growth. The 2012 outlook is raised by 0.1 mb/d due to oil-fired power needs in Japan. Demand averages 89.5 mb/d in 2011 (+1.4% or 1.2 mb/d y-o-y) and 91.1 mb/d in 2012 (+1.8% or 1.6 mb/d). A lower GDP case would cut 0.3 mb/d and 1.3 mb/d respectively from 2011 and 2012 demand.

World oil supply in July rose by 0.6 mb/d from June, to 88.7 mb/d, with non-OPEC production up by 0.4 mb/d. Rising Canadian production offset lower UK production. Non-OPEC supply is now seen averaging a lower 53 mb/d in 2011 on prolonged production outages, rising to 54 mb/d in 2012.

OPEC crude supply in July averaged 30.05 mb/d, up by 0.1 mb/d from June. Output has regained levels close to those seen before the Libyan crisis, although OPEC spare capacity now stands at only 3.3 mb/d. Output still lags a �call on OPEC crude and stock change - - that averages 31 mb/d in 2H11 and 30.8 mb/d for 2012.

June OECD industry oil inventories fell counter-seasonally by 11.8 mb to 2 678 mb, or 58.4 days of forward demand. The surplus to the five-year average narrowed significantly, from 18.2 mb in May to 4.7 mb in June. Preliminary July data suggest an 18.5 mb gain in onshore OECD inventories, but floating storage fell.

Global refinery crude runs for 2Q2011 have been raised by 0.1 mb/d since last month, as surging Russian June throughputs offset weaker-than-expected Chinese runs. 3Q11 estimates are unchanged, up 2.2 mb/d from 2Q11, at 75.9 mb/d, as stronger expected OECD runs counteract a weaker picture for non-OECD Asia.