The International Energy Agency has sharply cut its medium-term global oil demand forecast and predicts that the oil market will tighten from 2012 onwards, but that the situation will be counterbalanced by ample spare capacity.

In its Medium-term Oil Market Report 2009 released on June 29, the Paris-based IEA cut its global oil demand projection through 2013 by 3.3 million bpd from its previous forecast released last December.

The agency says oil demand is falling even in developing countries.

Washington state did not reach its June 1 self-imposed goal to displace 20 percent of the petroleum-based transportation fuels consumed by the state with biofuels, and that admission is yet another in a series of unforeseen obstacles for the biodiesel industry.

John Plaza, CEO of Wash.-based biodiesel company Imperium Renewables, said that while the state is reaching its Renewable Fuels Standard of selling 2 percent biodiesel out of all diesel sold within its borders, the state’s inability to reach its own goal of running agency vehicles with 20 percent biofuels is causing more problems for the cash-strapped industry in Wash.

The state’s shortcoming in meeting its biofuel goals compounds the woes for an industry that has been forced to contend with high feedstock costs, unexpected shifts in national policy, punitive tariffs imposed by the European Union on top of a protracted global recession that has dramatically cut demand for diesel fuel and limited lending.