Oil Demand Falls on Global Economic Woes, Iran's Nozari Says

By Ladane Nasseri

Oct. 11 (Bloomberg) -- Oil demand is faltering as the financial crisis slows global economic growth, Iranian Oil Minister Gholamhossein Nozari said, after crude oil fell below $78 yesterday for the first time in a year.

``Oil demand has decreased due to the current economic situation in the world,'' Nozari told reporters today on the sidelines of an oil-refining forum in Tehran. ``A way out needs to be found; the balance of the market is essential for oil consumers and oil producers.''

The Organization of Petroleum Exporting Countries announced this week it would hold an extraordinary meeting on Nov. 18 as the worsening credit crunch threatens to restrain economic growth and curtail energy demand. OPEC President and Algerian Oil Minister Chakib Khelil said on Oct. 9 the outcome of the meeting ``will very likely be to cut production.''

Crude oil in New York dropped 17 percent this week, the biggest one-week decline since March 2003 when a U.S.-led coalition invaded Iraq. Prices have dropped 47 percent from the record $147.27 a barrel reached on July 11.

The U.S., which consumes 24 percent of the world's oil, is now in a recession, according to a Bloomberg News survey of economists. The Dow Jones Industrial Average posted the steepest weekly slide in the history of the 30-stock average and the Standard & Poor's 500 Index capped its worst week since 1933. The financial turmoil has wiped out $25 trillion from global equities this year.

To contact the reporter on this story: Ladane Nasseri in Tehran at lnasseri@bloomberg.net;