The International Energy Agency (IEA) says the oil embargo on Iran will not affect the global oil supplies much since the supply is sufficient. In its latest report on the forecast for global oil demand, the agency said there was sufficient flexibility in oil supplies in the international market to withstand any impact of sanctions on Iran.

The report said that the customers of Iranian crude have already begun to look up for alternative supplies.

According to its latest report, the global oil demand will grow by less than 1 per cent in 2012 due to a weak global economy. It has cut the global oil demand forecast for this year by 250,000 barrels per day to 800,000 bpd. The oil demand in the industrialized nations is expected to fall by 0.8 per cent.

Eurozone crisis would lead to the greatest relative decline in European oil demand in 2012. On the other hand, the oil demand in developing nations will grow up by 2.8 per cent.

This will offset the reduced demands from the industrialized nations. Despite big cuts in forecasts for oil demand, oil supplies from OPEC went up in January to 30.9 million bpd, highest since October 2008, the reasons being a ramped up production by Libya and sustained output from Saudi Arabia and the UAE.