For the first time this year, the International Energy Agency (IEA) has cut its oil demand forecast, noting that it sees “persistent” economic headwinds in wealthy countries.

Predicting the global demand for oil will not grow as fast as in 2023 as it had forecast previously, it now foresees an increase of about 2.2 million barrels per day (bpd), or roughly 2%, which will bring total demand to an average of 102.1 million bpd. That would be about 220,000 barrels beneath last month’s forecast.

In its report on Thursday, the IEA said, “World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy. Demand in the OECD (Organization for Economic Co-operation and Development), and Europe in particular, is languishing amid a grinding slowdown in industrial activity.”

The agency said it felt the worsening outlook for wealthy countries would be “especially heavy.” It noted that EU demand remains limited due to the manufacturing downturn, as wealthy economies in the OECD are predicted now to see four quarters in a row of contracting demand, leading up to the end of 2023.

The IEA said, “Persistent macroeconomic headwinds, apparent in a deepening manufacturing slump, have led us to revise our 2023 growth estimate lower for the first time this year.”

It forecast that as China increases its petrochemical use, it would account for up to 70% of the growth in demand.

In 2024, the IEA is predicting that fuel demand growth would slow to 1.1 million bpd, “as the recovery loses momentum and as ever-greater vehicle fleet electrification and efficiency measures take hold.”