Oil consumption in the United States and OECD nations is weakening but China and India have yet to show signs of falling demand, making it unclear if the price fall below $120 is a turning point, the IEA's chief, Nobuo Tanaka, said.

He added that the current $119-$120 per barrel levels for crude oil are still very high, although prices have dropped from record highs near $150 a barrel touched on July 11.

Surging fuel consumption in China, India and the Middle East has been largely seen as responsible for fuelling oil's rally, pushing prices up more than six fold since 2002. The IEA expects oil demand to grow this year, by 890,000 barrels per day, according to its latest monthly oil report. As a result, the agency's biggest concerns remained on the supply side, rather than demand, Tanaka said.

Tanaka, who will address energy officials at the ASEAN Energy Business Forum 2008 on Wednesday, said he supported the decisions by some countries in the region to cut fuel subsidies. He said the removal of all subsidies would help promote energy efficiency, limit demand and put a lid on prices.

Read more: CNBC [1]