Gulf Arab oil producers raised oil supply this year to compensate for the loss of output from Libya, where civil war shut down production. Libya's output is recovering, but the International Energy Agency saw no need for producers to cut back, the agency's Deputy Executive Director Richard Jones said. 

"Our projection for the call on OPEC for the whole of 2012 is about 500,000 barrels per day above what they were producing in September. So we don't want them to cut back for sure," Jones told Reuters on the sidelines of Singapore International Energy Week.

Libya's output has risen since September, plugging some of the shortfall forecast by the IEA, which advises 28 industrialized countries on energy policy. Libyan exports would rise to around 350,000 bpd in November, sources at the National Oil Company (NOC) told Reuters in an interview on Sunday.

That was up from the 80,000 bpd the IEA said Libya produced in September. 

Fuel costs have been high enough to drag on the global economy all year, Jones said. 

Net oil imports for oil importing countries stood at around 5 percent of their GDP, Jones said. Global recession has typically followed such high oil costs in the past, he added.

"Whenever we see the so-called oil burden getting over 5 percent of GDP we're pretty nervous," he said. "That's the level we're at now. It's happened 3-4 times in the last 30-40 years and we pretty much always get a recession. Emerging markets are particularly sensitive — India has a high oil burden." 

Jones declined to name a price that would prevent fuel costs dragging on economic growth. 

Former IEA chief Nobuo Tanaka said earlier on Monday that a price of $70 to $80 was good for both producers and consumers, while a sustained Brent crude price above $100 was damaging to the global economy.

Oil prices eased lower on Monday, with Brent slipping below $110, as the dollar rose against the yen following the Japanese intervention. 

Oil producers could tolerate a further fall in oil prices to $80-$100 a barrel, United Arab Emirates Oil Minister Mohammed bin Dhaen Al-Hamli said on Monday at the Singapore International Energy Week (SIEW) conference, the first indication of a preferred price range from a Gulf Arab producer since OPEC talks collapsed in June.

He said a high oil price would lead to more investment in alternative energy and also more investment in crude production capacity, which would mean less volatile prices. 

The IEA was not concerned about a slowdown in China as the country's economy continues to grow quickly, Jones said. The health of industrialized economies were much more of a concern as China continues to grow quite quickly, he added. 

Investors and analysts said this week may see volatile trading due to a spate of economic events — US Federal Reserve, the European Central Bank and G20 meetings amid deepening concerns over the euro zone debt crisis. 

Brent crude fell 33 cents to $109.58 a barrel by 0851 GMT after closing at $109.91 on Friday.        

US crude fell 69 cents to $92.63 per barrel. 

Oil rallied last week on trading of the Brent-US crude spread and due to a deal struck by the euro zone to recapitalize its banks and strengthen its rescue fund.  

But persisting uncertainties about the plan have put pressure on the market and Brent crude ended Friday little changed from the week before.