The International Energy Agency (IEA) has said the current high price of oil is beginning to affect demand.

The IEA has said the global demand for oil has been slowing over the last few months, due to very high prices.

Despite their concerns, the IEA did not change it’s global oil demand growth forecast, which is at 1.4 million barrels per day.

The IEA also expressed concerns about the supply of oil, with oil production slowing by around 700,000 barrels per day in March due to the unrest in Libya.

“Hypothetically, if global supply were to chug along at March levels for the rest of 2011, OECD inventory could slip to near five-year lows by December,” the IEA said.

Oil price fell sharply yesterday, after the International Monetary Fund lowered it’s forecast of Japan’s yearly economic growth.

Attempts to negotiate a ceasefire in Libya has also affected oil price. There are still fears that anti government protests could spread across the Middle East to Saudi Arabia, the world’s largest oil producer.