World oil demand will rise this year due to growing economic activity in developing countries in Asia, the International Energy Agency said Thursday as it bumped up its forecasts.

The Paris-based IEA, which advises oil-consuming countries, predicted in its monthly report that oil demand will average 86.5 million barrels a day this year, or 1.6 million barrels a day more than in 2009.

The IEA's previous report, in January, had estimated daily demand in 2010 of 86.3 million barrels. The estimate for 2009 was unchanged at 84.9 million barrels a day, the IEA said.

At the same time, the agency said that if recent upward revisions to global economic growth "fail to live up to expectations," oil demand in 2010 could be lower by around 400,000 barrels a day.

The IEA said factors behind its view that developing countries would account for the full increase in oil demand included a closer correlation between rising economic activity and higher oil consumption in non-OECD countries, and the expanding use of non-oil based fuels in industrialized ones for heating, power generation and other activities.

"Even the recent record U.S. and European winter snows look unlikely to revive OECD demand — which remains flat at best in 2010 — and 'oil-less' recovery indeed," the report said. "In addition, the one area that drove OECD oil demand growth in recent years — North America — has virtually stalled as a result of the sharp economic recession, cheaper energy alternatives [natural gas and coal] and behavioural changes [notably the smaller size and greater efficiency of new vehicles sold]."

The IEA also said that while the influence of the U.S. dollar's exchange rate on oil prices had ebbed in December and January, it "may have come back with a bang" in February, driving oil prices lower as the dollar strengthened because of worries about public finances in several countries in the European Union.

A stronger dollar makes crude, which is priced in dollars, more expensive for investors holding other currencies, usually driving crude prices lower.

The IEA said its report was based on a forecast of global economic growth of 3.8 per cent in 2010 against an earlier estimate of 3.1 per cent.