The International Energy Agency on Thursday cut its global oil demand growth forecast for the first time this year, primarily citing a worsening economic outlook that weighs “especially heavy” on wealthy countries.

The world’s leading energy watchdog said global oil demand is now on track to climb by 2.2 million barrels per day in 2023 to reach an average of 102.1 million barrels per day.

China is set to account for 70% of the demand growth increase, the IEA said.

This forecast nevertheless represents a downward revision of 220,000 barrels per day from last month’s report, when the IEA predicted an increase of 2.4 million barrels per day of worldwide growth.

“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,” the IEA said in its latest monthly oil market report released on Thursday.

“World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy in many advanced and developing countries over the past twelve months,” the agency added.

Looking ahead to next year, the IEA expects demand growth to slow to 1.1 million barrels per day, “as the recovery loses momentum and as ever-greater vehicle fleet electrification and efficiency measures take hold.”

The IEA last month said that global demand will trickle nearly to a halt in the coming years and peak before the end of the decade as the transition away from fossil fuels gathers pace.

The Thursday report comes at a time when recent U.S. inflation and economic data renewed hopes that the Federal Reserve may be closing in on an end to its rate hiking cycle.

Oil prices traded slightly higher on Thursday morning, extending gains month-to-date.

Brent crude futures with September expiry were up around 0.4% at $80.42 a barrel at around 9 a.m. London time, while U.S. West Texas Intermediate crude futures with August delivery rose 0.3% to trade at $75.98 a barrel.