Indeed, if the recession deepens, 'the growing imbalance on the oil market ... presents a real challenge for all market participants and will be the main focus of discussion' at Opec ministers' meeting in Oran, Algeria, on Wednesday, the cartel said in its December monthly report.

The comments appear to be a hint that Opec could decide a cut in output at the meeting to redress the situation.

The oil market is looking for a reduction of up to two million barrels a day to boost prices and reduce rising stocks caused by a relentless erosion in energy demand in recession-hit consumer nations.

In its December report, Opec slashed its global oil demand forecasts for both 2008 and 2009.

'The deteriorating economies in OECD countries are estimated to reduce total world oil demand by 150,000 barrels per day (bdp) or 0.2 per cent for 2009 to average 85.7 million bpd,' it said.

For the current year, Opec cut its world oil demand forecast to show a decline of 66,000 bpd to average 85.8 million bpd.

Just a month ago, the oil cartel had been pencilling in growth in oil demand of 290,000 bpd in 2008 and an increase of 490,000 bpd in 2009.

'The worsening world economy is expected to have a large impact on oil demand next year, especially in the OECD (Organisation for Economic Co-operation and Development) countries,' the report said.

'Our forecast indicates a contraction in the first half of the year,' mainly as a result of a huge decline in OECD oil demand.

OECD oil demand was forecast to show an average decline of 1.3 millon bpd in the first half of 2009, Opec said.

However, this decline 'will shrink to half in the second part of the year as the world economy shows a better performance.'

The United States will account for most of the decline, while China, the Middle East, and Other Asia countries would see a rise in demand.

Already this year, the financial crisis was hitting oil demand 'not only in the US but also in major OECD countries,' Opec said.

While high oil prices had depressed demand in the first half of the year, 'the sharp downturn in the US economy reduced the country's oil demand in the second half of the year. The financial crisis spilled over into the rest of the world, which resulted in a strong decline in oil consumption,' the report said. -- AFP