Aug. 11 (Bloomberg) -- Crude oil rose, trading near a record $65.30 a barrel in New York, after the International Energy Agency said surging prices have done little to restrain demand.

The IEA said consumption this year will increase 2 percent, or 1.6 million barrels a day. High prices ``haven't completely choked off oil demand growth,'' the Paris-based adviser to 26 industrialized nations said in a monthly report today. Iran, the second-largest producer in OPEC, resumed uranium enrichment yesterday, risking sanctions by the United Nations.

``As long as the market can't see that high prices are biting, it will try'' to rise further, said Tor Kartevold, an oil analyst at Statoil ASA, Norway's largest oil company. ``With geopolitical uncertainty in the Middle East, it's an extremely dangerous combination.''

Crude oil for September delivery gained 32 cents to $65.22 a barrel after earlier touching $65.30 a barrel, the highest price since the contract debuted on the New York Mercantile Exchange in 1983. Prices have almost doubled from the end of 2003. Prices averaged less than $19 from 1995 through 1999.

Brent crude for September settlement rose 71 cents to $64.70 a barrel as of 1:16 p.m. on London's International Petroleum Exchange, where it earlier reached a record $64.75.

Increasing demand in the U.S. and China, the world's largest oil consumers, has forced producers including the Organization of Petroleum Exporting Countries to pump almost as much as they can, leaving little spare production to compensate for any disruptions to supply.

The IEA lowered its 2005 non-OPEC supply forecast by about 200,000 barrels a day, prompted by unscheduled shutdowns in the U.S. Gulf of Mexico, Norway and U.K., and the 2006 estimate by 400,000 barrels a day. The reduction means OPEC will have to produce more to prevent a drop in inventories.

Gasoline Demand

U.S. refineries are also straining to meet demand for fuels as high retail gasoline prices fail to slow consumption. U.S. gasoline demand in the four weeks ended Aug. 5 was up 1.4 percent from a year ago, boosted by an economy that grew at an annual rate of 3.4 percent in the second quarter.

Iran removed UN seals from equipment used to enrich uranium yesterday. U.S. President George W. Bush has said UN sanctions may be imposed on Iran.

Oil in New York earlier fell as much as 0.7 percent to $64.42 a barrel because the IEA for a fourth month reduced its forecast for growth in demand from China, as rising use of coal and hydropower cut need for fuel oil.

China's consumption this year will average 6.75 million barrels a day, down from the 6.79 million a day estimated last month, the agency said. The nation's oil demand in June already was down 1.3 percent from a year earlier.

``Even if demand keeps rising in China, it's not as much as anticipated,'' said Anette Einarsen, an oil analyst at Nordea Bank AB in Oslo. ``Problems with electricity generation in China won't be worse than last year.''

The IEA now projects China's oil demand will grow 4.9 percent in 2005, compared with an estimate in April for a 7.9 percent increase. Last year's oil demand in China surged 14 percent.

Oil prices rose in 1974 after an oil embargo that followed the Arab-Israeli war and from 1979 through 1981 after Iran cut oil exports. The average cost of oil used by U.S. refiners was $35.24 a barrel in 1981, according to the Energy Department, or $75.44 in today's dollars.

To contact the reporter on this story: Alejandro Barbajosa in London at abarbajosa@bloomberg.net

Last Updated: August 11, 2005 08:20 EDT