Global oil demand has started to grow after falling for a year-and-a-half, the International Energy Agency said on Thursday, in a sign that Asia’s economic revival is boosting commodities consumption.

The return of fuel consumption growth comes as oil prices surge to $75-$80 a barrel, up almost 70 per cent from January, prompting policymakers to worry about the impact of the rise on economic activity and inflation. 

In its monthly report, the western countries’ oil watchdog said: “The recent price spike, if further extended, risks derailing the recovery.” But it noted that current prices appeared to be justified by a mix of supply and demand fundamentals and a “heady brew of loose monetary policy, surging equities and a weaker dollar”.

The IEA explained that oil consumption in developing countries, led by China, was now “exceeding expectations”, while “the pace of demand contraction is easing” in rich countries. “This would suggest that global demand is well on track for resumed year-on-year growth in the fourth quarter, for the first time since the second quarter of 2008,” the report said.

But the Paris-based body warned that the growth followed the sharp fall in oil consumption from its late-2007 highs “in the face of a game-changing economic recession”.

The new forecast is likely to weigh on Opec’s meeting next month in Luanda, Angola, where the oil cartel will review its production policy ahead of the northern hemisphere winter.

Opec ministers have hinted that they remain opposed to a boost in output, but the IEA said the oil cartel was already pumping at its highest level so far this year and could officially sanction the current overproduction at the Luanda meeting.

“Several Opec countries, especially in the Gulf, are easing up on volume cuts for some buyers, especially in Asia,” the IEA said.

The 11 members of Opec bound by production quotas – excluding Iraq – last month pumped about 26.5m barrels a day, or about 1.6m b/d above the group’s official limit of 24.845m b/d. 

Analysts said it was still unclear what Opec would do, but added that the IEA’s demand forecast was more positive than that of the cartel or private sector analysts.

The energy watchdog also revised higher its forecast for oil demand in 2009 and 2010, in a further sign of a turnround in the global energy market.

The IEA said it now expects oil demand this year to average 84.8m barrels a day, a 210,000 b/d increase from last month, but still a 1.5m b/d drop from last year’s level. For 2010, the watchdog forecast oil demand at 86.2m b/d, up almost 1.4m b/d from this year. The IEA warned that the rebound in oil demand would be hit if oil prices surge higher.