May 19 (Bloomberg) -- Only a ``deep'' recession will act as a brake on record oil prices in the absence of extra supply from OPEC and nations outside the producer group, the Centre for Global Energy Studies said.

``It is difficult to believe that the world is well supplied'' as global oil inventories were depleting at an average rate of 800,000 barrels a day last year, London-based CGES said in a report today. Output from non-OPEC countries in the first quarter is about 300,000 barrels a day lower than a year earlier, it said.

``If the OPEC member-countries will not boost production, then, in the absence of non-OPEC supply growth, only a slowdown in demand will remove the upward pressure on oil prices,'' the CGES report said. ``In short, a recession that is deep enough and wide enough to affect oil consumption in the developing countries of Asia as well as the developed ones of the OECD.''

Dated Brent oil will average $113 a barrel this year, the energy consultancy said. This would rise to $120.60 a barrel if non-OPEC production is flat, and would fall to $102.20 a barrel if there is a recession. Once prices start to fall, ``the drop is likely to be steep,'' CGES, which is founded by former Saudi Oil Minister Sheikh Ahmad Zaki Yamani, said.

Saudi Arabia agreed to raise output by 300,000 barrels a day on May 16 in response to a request from U.S. President George Bush. Oil Minister Ali al-Naimi said the increase was to make up for output losses in other countries such as Nigeria, Venezuela and Mexico. Production from the 13 members of the Organization of Petroleum Exporting Countries fell by about 390,000 barrels a day in April, to 31.7 million barrels a day, largely because of declines in Nigeria, according to a monthly report from the OPEC Secretariat.

Oil prices have doubled in the past year. Crude gained $2.17, or 1.7 percent, to $126.29 on May 16, the highest close since futures trading began in 1983. Prices were at $127.48 at 1.33 p.m. in London as OPEC President Chakib Khelil said increased crude production from Saudi won't reduce prices, which are being driven by a weak U.S. dollar.

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

Last Updated: May 19, 2008 09:06 EDT