Consumption will jump by 1.82 million barrels to 83.2 million a day, the Paris-based adviser to 26 industrialized countries said in its first estimates for next year. The IEA also raised the forecast for growth this year by 180,000 barrels, to 2.49 million barrels a day, more than double an October projection.

Oil demand has surged this year, sending US crude prices above US$42 a barrel and gasoline pump prices to a record. The projections for 2005 show OPEC will strengthen its grip on world markets, as growth in supplies from non-member countries from Angola to Russia fails to keep pace with demand.

The outlook "suggests continuing upward pressure on prices," said Adam Sieminski, Deutsche Bank AG's global oil strategist in London. "Given that the IEA has raised demand and left non-OPEC supply pretty much alone, the overall tone is still bullish."

Oil prices, already down before the projections were released, maintained their losses. Crude oil in New York was down 40 US cents at US$39.24 a barrel in electronic trading at 10:14 am London time yesterday. Prices have declined by 7.7 per cent from a record US$42.45 reached June 2, the day before OPEC agreed to pump more oil.

Next year's forecast assumes the world economy will expand at about 4 per cent, less than the 5 per cent expected this year. It also assumes lower prices and a slowdown in demand in China, the second-largest consumer after the US.

In China, oil use will grow by 8.1 per cent next year, to average 6.8 million barrels a day, the agency said. That's almost half the 15 per cent rate assumed for 2004. China will still represent more than a fourth of growth in world demand next year.

The IEA, which was founded in 1974 to represent the interests of oil-consuming nations after the Arab oil embargo of the previous year, said this year's increase in demand will be a record. The forecast for 2005 is roughly double the average rate seen during the 1990s.

Non-OPEC supply in 2005 will rise by 1.2 million barrels a day, the same as this year, to an average of 51.3 million barrels a day, as declines in places such as the UK and US are offset by new supplies from Angola, Russia and Brazil.

In Russia, growth may slow next year because of shortfalls in export capacity, higher taxes and the potential damage to investment amid government tax claims against OAO Yukos Oil Co, the country's biggest oil exporter, the IEA said.

Russia, once the world's largest oil producer, has driven the surge in non-OPEC supply in the last four years, spurred in part by OPEC's efforts to bolster prices. Growth in production will slow to 400,000 barrels a day next year from 680,000 barrels a day in 2004.

World production is rising after a June pledge by Saudi Arabia and the rest of OPEC to increase output. World supply rose by 790,000 barrels a day in June to 82.5 million barrels a day, the IEA said.

Output from the 10 OPEC nations outside of Iraq reached 26.9 million barrels a day in June, 960,000 barrels a day higher than the previous month, the IEA said. In Iraq, production declined to 1.73 million barrels a day.

Inventories are swelling, the IEA said. Stocks in the 30 nations belonging to the Organization for Economic Co-operation and Development in May rose by 33 million barrels to 2.5 billion, 12 million barrels more than a year ago.

Because of rising demand, the IEA increased this year's estimate of the need for oil from OPEC, also known as the call on OPEC, by 300,000 barrels a day to 27.2 million barrels a day. The call next year rises by a further 200,000 barrels a day to average 27.4 million barrels a day.