Global oil demand in the first half of the year grew at the slowest level since 2020, when the COVID-19 pandemic struck, according to the latest monthly report from the International Energy Agency (IEA ).

The Paris-based organization attributed the slump to a “rapidly slowing China” and the country’s transition to electric vehicles (EVs), adding that demand outside China remains “tepid at best.”

IEA Warns of OPEC+ ‘Substantial Surplus’

Crude oil futures have been hit recently as OPEC —a dominant coalition of oil-producing nations—cut back on its demand outlook and growth projections, and the IEA warned that OPEC and its allies “may be staring at a substantial surplus.”

In early September, Saudi Arabia and its OPEC+ allies announced they would postpone plans to start unwinding voluntary output cuts by two months, in a bid “to halt the precipitous slide in oil prices,” the IEA said.

Crude oil futures were about 1% higher Thursday morning.