The rapid rise in global oil demand should lead the industrialised world to promote alternatives to oil as well as energy conservation, the International Energy Agency (IEA) said yesterday.

The warning from the West's energy policy adviser signals a sharp turnaround by the IEA, which has previously tried to cool oil markets by blaming prices on speculators and short-term supply disruptions.

"The reality is that oil consumption has caught up with installed crude and refining capacity," the Paris-based agency said. "If supply continues to struggle to keep up, more policy attention may come to be directed at oil demand intensity in our economies and alternatives."

The agency's view carries special weight because it was created in the mid-1970s after the Arab oil embargo to advise consuming governments about energy security and how to conserve oil so as to protect their economies from fluctuations in its price.

Any revival of talk about energy efficiency is likely to alarm the Organisation of Petroleum Exporting Countries, which meets next week in the Iranian city of Isfahan. - (Financial Times Service)