Global oil demand will increase by considerably less than previously expected in 2008, due to the anemic U.S. economy, which is probably already in recession, and slowing global growth, the International Energy Agency announced Friday.

The IEA lowered its per day global oil demand increase by 460,000 barrels, from 1.76 million to 1.3 million barrels - - its biggest cut to a growth forecast in seven years.

Global oil demand for 2008 is now projected to be 87.2 million barrels per day, the IEA said. Meanwhile, global oil supply for March 2008 totaled 87.3 million barrels per day, due to lower supplies last month from OPEC, the North Sea region, and non-OPEC Africa.

Oil prices to remain high

However, despite the reduce oil demand growth, IEA does not expect oil prices to ease considerable from their +$100 per barrel levels, The Wall Street Journal (subscription required) reported Friday. That's because oil consumption growth in emerging markets, particularly Asia, is expected to continue to remain strong and offset lighter U.S/Europe demand.

One example of the above? China. China's oil imports increased 25% in March 2008 to 4.1 million barrels per day - - a record - - as state-controlled refiners increased fuel production to end shortages in the world's fastest-growing major economy, Bloomberg News reported Friday.

Economic Analysis: The IEA report provides further support for an oil consuming nations' summit and organization - - an Organization of Petroleum Importing Countries. Initially, oil analysts thought oil's price would moderate when global demand moderated. It did not. Then they thought oil's price would surely decline as developed world economic growth slowed considerably. To date, it has not: after a brief pull-back, oil has mounted the $100 per barrel hurdle and offers more signs daily of making it a distant memory. Oil's price is likely to march ahead on strong emerging market economic growth and increased oil consumption in these developing regions. Hence, it's in the west's interest to collectively reduce its oil consumption - - and develop alternative energy sources - - to lower its oil bill, lest it face the specter of oil prices spiraling to truly astounding heights in the years ahead.