The trends driving the slowdown in oil demand growth

Plus, meeting with the President of Korea; a report on Ukraine’s energy security; dialogue with energy business leaders and more...

China’s changing economy and the rise of EVs are reshaping global oil demand growth?

Amid changes in the Chinese economy and the rising use of electric vehicles, global oil demand growth is down sharply this year from the rates seen in recent years – a shift with important implications for oil markets and the global energy system that IEA analysis has been highlighting for over a year.??

World oil demand is on course to increase by 900,000 barrels per day, or 0.9%, in 2024 and 950,000 barrels per day next year – down from growth of 2.1 million barrels per day, or 2.1%, in 2023, according to our latest monthly Oil Market Report . This assessment is supported by newly available data for the first six months of 2024, which confirms the significant slowdown we have been projecting since our first forecast for 2024 was published in June 2023.?

Our commentary accompanying the September Oil Market Report digs into the key factors. The recent downturn in China – the cornerstone of the growth in global oil demand so far this century – has been acute, with oil demand in July declining year?on?year for a fourth consecutive month. China’s overall economic growth is slowing from the rapid rates seen in previous decades. At the same time, burgeoning domestic sales of vehicles powered by alternative fuels are cutting into oil demand for road transport, while the development of a vast national high-speed rail network is constraining growth in internal air travel. Slowing construction investment amid a prolonged real estate slump is also weighing on demand.?

Outside China, oil demand growth is tepid at best. This environment, combined with expectations of continued growth in supply – notably from oil producers in the Americas outside the OPEC+ group, such as the United States, Canada, Brazil and Guyana – has helped fuel a recent sell-off in oil markets. And this year’s deceleration in global oil demand may mark the start of a period of more sluggish gains in oil consumption, with major technological, behavioural and demographic shifts at work.?

Read the highlights and overview from our September Oil Market Report and the accompanying commentary . You can also watch the webinar in which our analysts presented the key findings.

President of Korea honours our Executive Director for work on energy and climate?

President Yoon Suk Yeol of Korea recently awarded our Executive Director Fatih Birol the country’s highest diplomatic honour at a special ceremony at the official presidential residence, recognising Dr Birol’s major contributions on international energy and climate issues.?

Presenting him with the Gwanghwa Medal, President Yoon highlighted Dr Birol’s “outstanding” work to further international energy security and tackle climate change. Dr Birol expressed his gratitude, saying he was “deeply humbled” to receive the honour, attributing it to “the invaluable and tireless work of my IEA colleagues to help Korea and other countries shape a secure and sustainable energy future.”?

While in Korea, our Executive Director discussed a wide range of energy and climate topics in bilateral meetings with several government and business leaders. He also opened the World Climate Industry Expo in Busan, co-hosted by the Government of Korea and the IEA. In his speech, he highlighted that the world needs all forms of clean energy to meet its energy security and climate goals and emphasised that clean energy technologies offer countries major industrial opportunities.?

You can read more in our news article and watch a video clip of the special ceremony here .

A new report on Ukraine's energy security and the coming winter?

Last week, we published a special report on Ukraine's energy security and the coming winter, which provides an action plan for Ukraine and its partners to help the country meet its energy needs through the challenging months ahead. European Commission President Ursula von der Leyen and our Executive Director held a joint press conference in Brussels to launch the report. You can watch it back here .

While Russia has targeted Ukraine's energy system since it launched its full-scale invasion of the country in February 2022, attacks on key infrastructure have recently increased and intensified. The resulting damage poses a major threat to reliable access to power, heating and communications services across Ukraine as temperatures drop.?

The report set out 10 key actions to reinforce Ukraine’s energy security – which is closely linked to its overall security – at this critical juncture. It takes stock of the war’s impact on Ukraine’s energy sector, identifies top risks, and recommends immediate actions that Ukraine and its partners can take in response. Additionally, it addresses the unique challenges Moldova faces as its gas transit contract with Russia’s Gazprom comes to an end.?

You can read more in the press release or explore the full report here . And you can learn more about our work on energy security with partners in Ukraine, which officially joined the IEA as an Association country in 2022, in our recent videos .

Over 100 executives attend largest ever meeting of IEA Energy Business Council?

We recently held the largest ever meeting of the IEA Energy Business Council – the overarching body through which our Agency interacts with the private sector – to discuss a wide range of issues related to energy security and clean energy transitions.?

The aim of the Energy Business Council, or EBC, is to promote dialogue among the IEA, the business community and policy makers on a broad range of cross-cutting issues that have implications for the global energy system. The IEA has a longstanding dialogue with the private sector in order to exchange data, information and expertise on key relevant topics and to help inform IEA analysis and recommendations.?

The EBC meeting at our headquarters last week, chaired by our Executive Director, was attended by more than 100 executives from around 80 leading global companies, spanning Africa, Asia-Pacific, Europe, Latin America, the Middle East and North America. The companies are involved in a wide range of activities, including renewables, information technologies, car manufacturing, oil and gas, financial services, utilities, and energy intensive industries.?

Learn more about what was discussed at the meeting in our news article – which also includes a full list of participating companies.

In other news...?

Our Deputy Executive Director Mary Burce Warlick recently travelled to Thessaloniki, Greece, for the MENA-Europe Future Energy Dialogue. She participated in a panel discussion on financing cross-border energy infrastructure and met senior officials to discuss major energy and climate issues, including Egypt’s Deputy Minister for Electricity and Renewable Energy Sabah Mashaly, European Commission Director-General for Neighbourhood and Enlargement Negotiations Gert Jan Koopman, German State Secretary Stefan Wenzel, Morocco’s National Office for Electricity and Water CEO Tarik Hamane and United Arab Emirates Assistant Foreign Minister Abdulla Balalaa.?

Earlier this month, we gathered about 80 experts from around the world at our headquarters in Paris for a conference focused on expanding the role of nuclear power in secure and affordable energy transitions. Learn more in our news item .?

We also recently convened experts at our headquarters to discuss clean energy technology manufacturing and trade ahead of the publication of our flagship Energy Technology Perspectives report next month. About 25 high-level decision makers from government, industry, academia and civil society shared their insights. Read our news article on the workshop and keep an eye on our website for more details on the report's October launch.

ENERGY SNAPSHOT??

The world’s oil demand growth is slowing sharply following its post-pandemic rebound. This is largely the result of decelerating growth in China, which has long been a powerful driver of global oil demand, as the country’s economy changes and use of electric vehicles increases. Learn more in our new commentary .

WHAT WE'RE READING & WATCHING:??

• World Oil Demand Growth Is Slowest Since Pandemic as China Cools, IEA Says [Bloomberg News]? ?

• Oil prices likely to keep falling as demand weakens, says IEA head [Financial Times]?
• China oil products demand begins decline from 2023 peak, researcher says [Reuters]?
• Amplifying Africa's role in the global hydrogen market [CNBC Africa]?
• The Brutal Economics of Reaching Net Zero [Bloomberg Businessweek]??
• "?? ??? ?? ? 22% ??… ??? ??? ??" [Chosun]?
• “???? ???? ? ????”…K??? ??? ?? ?? [Maeil Business]? ? ?

COMING UP:?

Early October: Global Hydrogen Review 2024 ?

Early October: Renewables 2024 ?

15 October: Oil Market Report ?

Mid-October: World Energy Outlook 2024 ?

Late October: Southeast Asia Energy Outlook 2024 ?

Late October: Energy Technology Perspectives 2024 ?

Late November: The Future of Geothermal Energy ?

5 December: Global Conference on Energy and AI ?