"Increased energy costs, including high taxes as well as energy conservation measures, increased efficiency and alternative fuel use are among the main factors moderating oil demand growth next year," OPEC said.
OPEC's 2008 forecast compares with an estimate for growth of 1.3 million bpd in 2007, a figure little changed from the previous estimate, and is far lower than some projections for next year.
The International Energy Agency (IEA), an adviser to 26 industrialized countries, said in its own monthly report on Friday that demand would balloon by 2.2 million bpd in 2008.
Oil is trading near a record high of $78.65 hit last August. OPEC, source of more than a third of the world's oil, says refining bottlenecks, speculation and political tension have pushed prices up.
The IEA has repeatedly urged OPEC to pump more oil to lower prices, a call OPEC has rebuffed. The 12-member group meets next on Sept. 11 to set supply policy.
LOWER DEMAND FOR OPEC OIL
OPEC's report put 2008 demand for its crude at 30.71 million bpd, down from 30.78 million bpd this year, partly because of increased supply from non-members and because of biofuels.
The group has voiced concern that alternatives to oil may erode its market in years ahead. Developments in biofuels, a growing market fueled by corn, sugar and rape, need "careful monitoring," OPEC said.
Even so, OPEC lifted expected demand for its oil in 2007 from last month's figure of 30.56 million bpd, due to lower supply from non-member countries such as the U.K. and Norway.
OPEC is also more pessimistic about expansion of the world's oil refineries next year than the IEA. It expects refining capacity will grow by 1 million bpd, less than demand growth in the lowest case.
World consumption could expand by as much as 1.45 million bpd or as little as 1.2 million bpd in 2008, the report said, depending on uncertainties such as Indian demand and the chance of a very warm winter.
OPEC agreed last year to lower output by 1.7 million bpd and Monday's report showed members keeping a lid on supply.
The 10 OPEC members, excluding Iraq and Angola, bound by production cut deals pumped 26.381 million bpd in June, down from 26.403 million bpd in May, the report said, citing data from secondary sources.