The demand for oil is expected to beat forecasts for next year driven by China and the Middle East, raising the prospect that fuel prices could head back towards $100 a barrel if supplies remain at their current levels.

According to the International Energy Agency (IEA), the Paris-based energy watchdog, global demand for oil in 2008 will grow by 2.3 per cent, or 2.1 million barrels of fuel a day as the world's emerging economies continue to thrive.

Earlier this month, Opec, the cartel of oil-producing nations, opted to freeze production levels after rejecting calls for an increase in output by 500,000 barrels per day from the current daily output of 27.25 million barrels, arguing that the global market for crude oil was “well-supplied”.

The price of oil has remained volatile in recent months falling from $99.29 high last month, back down to $89 per barrel. However, since the decline, prices have edged up again to $93.

Opec's assessment of current oil supplies remains unchanged, after it published a report today stating it will keep its estimates unchanged for the end of next year into 2008. The cartel plans to review its policy on whether to increase oil supplies in February next year.

The IEA said in its report today: "Mature economies are only supporting actors in our global demand growth projections. The bulk of 2008 demand growth remains within non-OECD countries, where regional growth patterns are expected to be similar to the past two years."

The agency also warned that high oil prices could have an effect of global economic growth, impacting consumer spending and eating into corporate profitability, adding that although the effect may not be large it could be more significant if other areas of economic weakness emerge.

However, in the short term the IEA said the demand had improved, trimming its winter 2007 demand forecast.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts