According to the International Energy Agency, Organisation for Economic Co-operation and Development (OECD) countries’–i.e., rich countries’–oil demand peaked in 2005 near 50 million barrels per day. OECD oil demand is down 10% from the 2005 high, yet total oil demand is up over the same time period. The reason of course is that oil demand in non-OECD countries has risen 50% over the last decade–a 4% compound annual growth rate.
Global economic growth is the primary driver of oil demand. My Oil Demand Growth vs. Economic Growth chart shows that economic growth and oil demand growth are closely correlated with global economic growth accounting for over 40% of the variation in oil demand growth. Since oil consumption has peaked in rich economies, oil demand growth moving forward will become more heavily influenced by economic growth in non-OECD countries. If you invest in oil or oil companies, evaluating the economic prospects of non-OECD countries is vital to your investment success.