The International Energy Agency also said that the BP oil-spill in the Gulf of Mexico could lead to a tightening of regulations and crimp supplies, but this would not necessarily be a "swansong" for offshore development.

History suggested that even a regulatory clamp down might not obstruct exploration, and development from deepwater fields.

It was not yet clear whether the Deepwater Horizon rig disaster would become "a defining moment for broader US energy policy and for offshore oil and gas development worldwide."

Analysts had rushed to estimate how much deepwater production was at risk and the IEA's "tentative view" was "up to 300,000 barrels per day by 2015."

Authorities in the United States, Britain, Norway, Brazil, Canada and China were reviewing their procedures, although any changes in US regulations might not be transferable elsewhere, nor amount to "a swansong for offshore expansion."

It said: "The government may try to harness changing public sentiment behind legislation aimed at weaning the US away from oil use, and mitigating climate change."

The agency recalled that Britain enacted more than 100 new safety procedures after the Piper Alpha incident in the North Sea in 1988, and separated regulation of field licensing from operational safety, "an example the US is now belatedly following."

In Britain, "the considered response (to tighter rules) nonetheless allowed scores of new offshore fields to be developed in the subsequent decade, generating over 300,000 barrels per day of incremental offshore supply."

The IEA said that the long-term impact of the Deepwater Horizon spill might turn on whether negligence by operators or regulators was the "key cause" which might have a lesser effect than if the main problem turned out to be operating procedures and regulatory structures.

The IEA said in its monthly review of trends in the oil market, that the two key factors which could upset estimates for the price of oil were strains over sovereign debt in advanced countries and the pace of growth in China.

The agency revised up its estimate of global demand by 60,000 barrels per day to 86.4 mbd this year.

It now expected demand from the 31 advanced countries in the area covered by Organisation for Economic Cooperation and Development to recover from depressed levels in 2009 by 0.2 percent or 70,000 barrels per day, marking an increase of 80,000 barrels a day from its curtailed estimate last month.

The upward revision was driven by stronger data mainly from North America "as the economic recovery gained traction."

But "total European demand in the first quarter of 2010 turned out to be inordinately weak" partly owing to air travel disruption in April but also because of economic strains.

The IEA, the oil monitoring and policy arm of the OECD, said bluntly that "whether Europe sees consolidated economic recovery, and assuages worries about the eurozone's long-term viability, will arguably depend on the largest economies" in Germany and France and their ability to support weaker members.

It warned that if economic prospects in European worsened, "the effects are also likely to be felt outside the region -- more notably China, as Europe has become its main trading partner."

Oil demand in the Pacific region appeared to have risen by 2.3 percent in April on a 12-month comparison and the picture overall "suggests that the much-dreaded slowdown of the Chinese economy ... has yet to materialise."

The IEA said: "Today, short-medium term market trends appear to hinge on two main 'game changers' - the threat to global economic recovery from OECD sovereign debt issues, and the sustainability of Chinese oil demand growth."

It said: "China's urgent need for energy supply to sustain economic growth and raise the wellbeing of its people has become a global market issue."

In the last decade, the three main Chinese national oil companies, CNPC, Sinopec and CNOOC, and other Chinese interests "have ramped up their upstream investment activities overseas."

The IEA said that "from January 2009 to April 2010 alone, they spent around 29 billion dollars (24.0 billion euros) worldwide to acquire oil and gas assets."

The agency estimated that demand for oil in the whole of 2010 would rise by 2.0 percent or 1.7 mbd from the level in 2009, driven almost entirely by demand from outside the OECD area.

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