The IEA yesterday cut its global oil demand growth forecast for 2012, with the market dragged down by a weakening world economy and stubbornly high prices while the nuclear crisis with Iran deepens.

The International Energy Agency in its January monthly report cut its outlook for 2012 demand growth to 1.1 millon barrels per day from 1.3 mbpd, citing the impact of a fall in demand in the fourth quarter of 2011 of 300,000 bpd.

According to the IEA, demand will be divided between declining appetite for oil in richer OECD countries, especially in Europe, and continued growing demand in developing countries, especially Asia.

The current standoff with Iran, faced with the prospect of an European Union oil embargo on fears Tehran is aiming to acquire nuclear weapons, has also “further dampened prospects” for demand, along with a mild winter in the northern hemisphere, the IEA said.

The IEA said oil prices, however, remained stable as “a rising likelihood of sharp economic slowdown” was offset by supply concerns linked at least in part to the Iranian crisis.

In December, non-OPEC supply fell by 140,000 bpd to 53.2 mbpd due to Middle East unrest and other unplanned outages, the IEA said.

A rebound to 340,000 bpd growth is expected for the first quarter of 2012 and 1.0 mbpd for 2012 overall.

The IEA warned that in 2012 that geopolitical risks have shifted to Nigeria, Iraq and “most pressingly, Iran.”

Because of the Iranian nuclear crisis, at least a portion of Tehran’s 2.5 mbpd of oil exports could be denied to OECD refiners in second half 2012, although more “apocalyptic scenarios for sustained disruption to Strait of Hormuz transits look less likely,” the IEA said.

OPEC oil output in December rose by 240,000 bpd to 30.89 mbpd, the highest in more than three years, on a rapid recovery in supplies from Libya and lesser increases from Saudi Arabia and the UAE, the IEA said.

Last month, OPEC increased its official 2012 output target to 30 mbpd.