July 7 (Bloomberg) -- Iran’s oil will probably extend declines in the first four months of the year as the political turmoil that followed last month’s disputed presidential election damps economic growth, consultant PFC Energy said.

Oil demand dropped by 30,000 barrels a day in January to April year, compared with a growth of 100,000 barrels a day in the same period in previous years, Raja Kiwan, PFC’s Dubai-based analyst, said in a report received by e-mail late yesterday.

“The on-going political turmoil in Iran has had the immediate impact of reversing several previously strong trends in demand growth,” Kiwan said. Iran’s product demand growth may slow further owing to “disruption brought to both economic activity by the political turmoil and the longer-term effects on the overall business climate.”

Iranians claiming the re-election of President Mahmoud Ahmadinejad was rigged have held demonstrations in the streets, and authorities have responded with force and arrested hundreds of activists.

Iran is the biggest oil consumer in the Middle East after Saudi Arabia, using 1.73 million barrels a day last year, according to data from the BP Statistical Review. The country is the second-biggest producer in the Organization of Petroleum Exporting Countries.

To contact the reporter on this story: Ayesha Daya in Dubai adaya1@bloomberg.net

Last Updated: July 7, 2009 04:22 EDT