Dec. 11 (Bloomberg) -- The International Energy Agency, an adviser to 28 nations, said global oil demand will contract this year for the first time since 1983 and cut its outlook for 2009.

Consumption worldwide will shrink in 2008 by 200,000 barrels a day, or 0.2 percent, the IEA said in a monthly report today. The reduction in demand is concentrated in developed economies in the Organization for Economic Cooperation and Development, where oil use will tumble 3.3 percent. Next year’s growth may be wiped out if the economic slump deepens, the agency said.

Oil prices have plunged more than $100 a barrel from a record in July as the U.S., Europe and Japan face their first simultaneous recession since World War II. Ministers in OPEC, responsible for more than 40 percent of world oil production, have said the group is likely to cut output when it meets Dec. 17 in Algeria to shore up prices.

“It’s been evident for many months now that demand in the OECD on the back of the economic slowdown has been getting clobbered,” David Fyfe, head of the IEA’s oil industry and markets division, said in a telephone interview from Paris. “In response, OPEC looks likely to cut supply significantly at its next meeting.”

Weaker Economy

The IEA reduced its 2008 estimate by 350,000 barrels a day, or 0.4 percent, to 85.8 million barrels a day following weaker economic forecasts from the International Monetary Fund. In the fourth quarter of this year demand will shrink by 1.6 million barrels a day, or 1.8 percent.

Next year consumption worldwide will increase by 400,000 barrels a day, or 0.5 percent, to 86.3 million barrels a day, according to the report.

While the agency trimmed its estimate for oil use in developing nations by 300,000 barrels a day in 2009, that still leaves growth of 2.9 percent, taking non-OECD demand to 39.4 million barrels a day. Chinese consumption will climb 3.7 percent to 8.23 million barrels a day.

“There are some signs that non-OECD demand is bearing up,” Fyfe said. The persistence of fuel subsidies in some Asian countries despite the fall in oil prices indicates “some stickiness with non-OECD demand,” and reinforced the agency’s perception that growth will increase next year.

Forecast demand in the countries of the OECD was cut by 300,000 barrels a day to 47.5 million barrels a day in 2008, and by 200,000 barrels a day to 46.9 million a day in 2009.

‘Prolonged Recession’

“Clearly, if we are now heading for a prolonged and global outright recession, then the 0.5 percent global oil demand growth we now envisage for next year may not materialize,” the report said.

The Organization of Petroleum Exporting Countries will have to provide about 30.8 million barrels a day next year to balance supply and demand, the IEA said, 200,000 barrels a day more than estimated in the previous report. The adjusted “call” on OPEC was cut by 500,000 barrels a day in the fourth quarter of this year.

Supply estimates from outside OPEC were cut for this year and next because of prolonged disruptions in Azerbaijan and the Gulf of Mexico. That means non-OPEC supply in 2008 will shrink for the first year since 2005, when hurricanes battered platforms off the U.S. coast, by 90,000 barrels a day to 49.6 million barrels a day.

Next year non-OPEC production will increase by 480,000 barrels a day to 50.08 million a day.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

Last Updated: December 11, 2008 06:20 EST