The Paris-based agency based its forecast on an "unusually severe recession" in rich countries, and also revised its expectations for developing countries where oil demand is seen falling for the first time in 15 years.
In its closely watched monthly survey, the IEA cut its forecast for demand this year by a daily 1 million barrels to 83.4 million barrels a day
- 2.8 percent lower than last year.
The IEA said that "the pace of contraction is close to early 1980s levels, with a growing consensus that economic and oil demand recovery will be deferred to 2010."
In rich countries belonging to the Organization for Economic Cooperation and Development, the IEA forecasts a cut in oil demand of 760,000 barrels to 45.2 million barrels a day
- 4.9 percent lower than 2008.
In non-OECD developing countries, the IEA said it has lowered its expectation for oil demand by 230,000 barrels to 38.3 million barrels a day
- 0.1 percent lower than last year.
"Although small, this will be the first contraction in non-OECD demand since 1994," the agency said.
Gains in oil prices in late March and early April are due to financial markets' hopes that the global economy is starting to mend, but weak economic fundamentals will limit further gains, the agency said.