The International Energy Agency Friday raised its forecast for oil demand for 2013, citing expectations of higher demand from China, the world's second largest oil consumer.

In its monthly market report, the Paris-based agency raised its 2013 demand forecast by 240,000 barrels a day to 90.8 million barrels a day.

However, the picture of strengthened global demand comes at a time when production from the Organization of the Petroleum Exporting Countries in December fell to its lowest level in a year, the IEA said. It could mean oil prices are well-supported at current levels. Oil prices have stayed consistently high despite economic woes in Europe and in the U.S.

"All of a sudden, the market looks tighter than we thought," said the IEA, which represents major energy-consuming nations.

In China, which alone accounted for two-thirds of total oil demand growth in the four years to 2011, infrastructure spending, stronger electricity use and increased rail usage could underpin an increase in demand, the IEA said. The report also said robust new vehicle sales and strong demand for cheap plastics could provide further support. However, it cautioned that heightened debt levels and economic uncertainties in China could lead to sharp swings in demand, in both directions, throughout the year.

In Europe, the picture still remains bleak. The IEA projects demand from the region will fall 1.7% in 2013 to 13.6 million barrels a day. This comes after European demand, in the third quarter of 2012, saw its sharpest quarterly contraction since the onset of the financial crisis in 2008.

Non-OPEC production is forecast to rise by 1 million barrels a day to 54.3 million barrels a day in 2013, with the IEA expecting a reduction in unplanned outages. OPEC crude supply in December fell to its lowest level in a year as Iraq and Saudi Arabia reduced production.

Iraqi crude production fell because of weather-related delays in exports and a standoff between Baghdad and the government of the Kurdish region. Production fell 235,000 barrels a day to 2.4 million barrels a day in December.

In Saudi Arabia, production fell because of a drop in demand due to a decline in the use of air conditioning in the country and lower demand from refineries undergoing seasonal maintenance, the report said.

"Nothing for the global market to worry about," the report said. "Speculation that recent lower Saudi production levels equates to a desire for higher prices appears misplaced."

OPEC revenues are estimated to have reached peak levels in 2012 at more than $1 trillion as countries increased output and Brent prices stayed at record levels, the IEA said.

In North Africa, energy sectors are facing hurdles. Libya's production fell 50,000 barrels a day to 1.4 million barrels a day in December as striking workers forced shut-in of production and amid continuing militia attacks on oil infrastructure. The kidnapping of foreign workers at a gas facility in Algeria this week and the military operation to rescue them is casting a dark cloud over the outlook for the country's energy sector.