The International Energy Agency (IEA) has reported trends for 2024, indicating a 4.3% year-on-year increase in global electricity demand. Overall energy demand is expected to rise by 2.2%, with emerging markets contributing significantly to this growth.
Contributing factors include last year’s high temperatures increasing air conditioning needs, along with the rise in electric mobility, data centres, and artificial intelligence. Renewables and nuclear energy are the main sources addressing this demand, while fossil fuels, particularly oil, have seen their share of global energy consumption fall to below 30%, down from a peak of 46% fifty years ago.
Shifting Away From Fossil Fuels
These trends point towards a world shifting further away from fossil fuels, with alternative energy sources picking up the slack. Demand for electricity continues to rise, largely driven by changing climate conditions and the increased reliance on technology. Last year’s temperatures drove up air-conditioning use, pushing power grids to their limits in some regions. That’s not the only factor at play, though—electric vehicles, data centres, and AI are all adding pressure to global energy supplies.
What stands out is how this demand is being met. Renewables and nuclear are stepping in, while fossil fuels, particularly crude, are losing ground. The fact that oil’s share of global consumption has dropped below 30% for the first time in decades speaks volumes. Five decades ago, that number stood at 46%. Now, it’s clear that other energy sources are filling the gap.
In the short term, this ongoing transition affects global supply chains, pricing structures, and investment flows. In particular, traders should keep an eye on how emerging markets drive overall consumption. Historically, these economies have ramped up energy use at a rapid pace as they develop, leading to adjustments in production, trade policies, and pricing.
At the same time, volatility in energy markets remains a concern. Commodity prices are directly tied to energy consumption patterns, and an increase in electricity demand—particularly from highly industrialised nations—can have knock-on effects. If renewables and nuclear continue their upward momentum, traditional energy markets could experience more sudden shifts.
Monitoring Energy Market Volatility
For those focused on forward contracts and options tied to fuel sources, careful assessment of projected energy distribution is necessary. If the move away from crude continues at its current pace, existing positions should be weighed against the strength of non-fossil fuel alternatives. Supply adjustments could drive corrections across multiple asset classes.
With all this in motion, traders would do well to follow global energy reports closely. Consumption patterns are shifting, but responses from producers, policy makers, and investors will determine just how quickly markets adjust.
