Table of contents

Approximate read time: 5 minutes

1. Key points

  • Energy markets are influenced by both physical factors, such as the availability of natural resources, and transport/transmission infrastructure, and financial factors, such as changing prices in commodities on the open market.
  • Internationally, energy consumption remains heavily dependent on fossil fuels, with petroleum and other liquid fuels constituting a third of global consumption.
  • Global events since 2020, such as the Covid-19 pandemic and conflicts in Ukraine and the Middle East, have caused major energy market volatility.

2. How is energy different from other commodities?

Energy markets consist of both physical and financial elements.[1] The physical elements include the natural resources themselves—petroleum fuels, natural gas and other fuels for example—and energy infrastructure such as power stations, refineries and transmission systems. Financial markets include structures and institutions for trading products which derive their value from the value of the physical commodity. Both elements have an impact on supply and demand affecting energy prices, including in both the wholesale and retail electricity markets. Other factors will affect the cost of energy, including the way energy markets are regulated in different jurisdictions around the world.[2]

The law of conservation of energy states that energy is neither created nor destroyed.[3] Energy changes its form when it is transported, stored and eventually converted into usable energy. These forms are generally categorised as potential, or stored, energy and kinetic, or working, energy. The processes by which forms of energy are changed are never completely efficient. The systems by which energy is converted always involve some conversion into unusable energy. For example, 8.6% of electricity transferred across Great Britain’s transmission and distribution networks is lost before it reaches the consumer.[4] This energy is dissipated in the form of heat as a result of electrical resistance in these networks.[5]

3. How is energy traded on the wholesale market?

Energy supply varies over time because of fluctuating demand. For example, electricity demand is subject to seasonal variations across the week, and even during the day.[6] Because of this fluctuation in demand, there are different ways of trading energy on the wholesale markets. These include the futures market and the short-term spot market.[7]

The futures market is based on the agreed cost of energy supplied at a predetermined date.[8] The short-term spot market is based on the short-term cost of energy such as the physical volumes of electricity and gas. The primary short-term trading venue is a daily auction referred to as the day-ahead market.

The short-term spot market is subject to more volatility than the futures market. The amount of competition in energy markets also has a strong impact on wholesale prices which, in turn, influence retail prices.[9]

4. How can global energy consumption be measured?

Given the different ways in which energy is stored, transferred and traded, there are several different measures for the volume of global supply. However, it is possible to compare energy consumption globally.

The standard unit of measurement for comparing different fuels and fuel costs is British thermal units (Btu).[10] This measures the heat content of fuels or energy sources. In 2024, global energy consumption was 606.037 quadrillion (quad) Btu.[11] The largest energy source was petroleum and other liquids including biodiesel, ethanol, liquids produced from coal, gas, oil shale and other hydrocarbons. This made up roughly a third of global energy consumption (33.2%). The next largest were coal (29.6%) and natural gas (25.7%).

Figure 1. Global energy consumption, 2024

Figure 1: This bar charts shows the components of global energy consumption: coal, natural gas, petroleum and other liquids, and nuclear, renewables and other.
(US Energy Information Administration, ‘Primary energy’, accessed 6 July 2026)

5. Which parts of the world are net importers and exporters?

It is possible to establish which parts of the world are net importers or net exporters of energy based on their net energy imports as a proportion of energy use. Most regions of the world are net energy importers. In 2023, Europe and Central Asia was the largest net importer, with imports making up nearly half of this region’s energy use (49%).[12] There were two regions which were net exporters: North America (-17.9%) and Latin America and the Caribbean (-7.5%).

Figure 2. Net energy imports as a proportion of energy use by region, 2023

Figure 2: This bar chart shows net energy imports as a proportion of energy use for different regions of the world.
(Our World in Data, ‘Energy imports and exports, 2023’, 27 February 2026, based on International Energy Agency and World Bank data. The regions are based on categories used by the World Bank.)

There is a large variation within these regions, however. For example, while most European countries are net importers, the largest net energy exporting country in the world is Norway (-704%).[13] Germany is a larger net importer (70.5%) than France (47.1%) or the UK (44%). In North America, the largest net exporter is Canada (-89.6%) which is a significantly larger exporter than the US (-9%).

6. What recent developments have there been in the global energy market?

Growth in global energy consumption averages at around 1% to 2% a year.[14] However, global oil and natural gas markets have both been affected by volatility in recent years.[15]

Both the Covid-19 pandemic and military conflicts—including the wars in Ukraine and in the Middle East—have affected global energy markets. In 2020, the Covid-19 pandemic resulted in global energy consumption growth dropping below 0%.[16] This was followed by a spike in demand in 2021, with consumption growth reaching 5.1%. The International Energy Agency (IEA) reported in 2026 world oil demand was forecast to contract this year, with the petrochemical and aviation sectors most affected by this change.[17] The World Bank has said the war in the Middle East in 2026 represented a “historic shock” to commodity markets, resulting in the largest oil supply loss on record.[18]

While the recent conflicts have resulted in shocks to energy supply, the IEA has noted increased liquefaction capacity in the US and Qatar were expected to lead to increased export capacity for liquefied natural gas by 2030.[19] The IEA has also predicted global electricity demand is expected to expand at an accelerated rate over the period from 2026 to 2030, citing the increased electrification of industry, transportation, and buildings sectors around the world.[20] It has said there will be an average of 50% more electricity demand per year during these five years than the annual average additions over the past decade.

7. Read more

Image by Arturo Añez on Unsplash.

References

  1. Federal Energy Regulatory Commission, ‘Energy primer: A handbook for energy market basics’, December 2023. Return to text
  2. US Energy Information Administration, ‘Electricity explained: Factors affecting electricity prices’, accessed 6 July 2026. Return to text
  3. US Energy Information Administration, ‘What is energy?: Laws of energy’, accessed 6 July 2026. Return to text
  4. UK Power Networks, ‘Distribution network energy losses’, accessed 6 July 2026. Return to text
  5. National Energy Systems Operator, ‘Transmission losses,’ January 2024. Return to text
  6. Department of Energy and Climate Change, ‘Seasonal variations in electricity demand’, March 2024. Return to text
  7. Bundesnetzagentur, ‘This is how the electricity market works’, accessed 6 July 2026. Return to text
  8. Europex, ‘What is the European energy market?’, accessed 6 July 2026. Return to text
  9. Ofgem, ‘Data portal: Wholesale market indicators’, accessed 6 July 2026. Return to text
  10. Science Direct, ‘British thermal unit’, accessed 6 July 2026. Return to text
  11. US Energy Information Administration, ‘Primary energy’, accessed 6 July 2026. Return to text
  12. Our World in Data, ‘Energy imports and exports, 2023’, 27 February 2026 Return to text
  13. As above. Return to text
  14. Our World in Data, ‘Energy production and consumption’, updated January 2024. Return to text
  15. International Energy Agency, ‘Oil market report: May 2026’, 13 May 2026; and ‘Natural gas’, accessed 6 July 2026. Return to text
  16. Our World in Data, ‘Energy production and consumption’, updated January 2024. Return to text
  17. International Energy Agency, ‘Oil market report: May 2026’, 13 May 2026; and ‘Oil market report: June 2026’, 17 June 2026. Return to text
  18. World Bank, ‘Commodity markets outlook: April 2026’, 28 April 2026. Return to text
  19. International Energy Agency, ‘Gas 2025’, 27 October 2025. Return to text
  20. International Energy Agency, ‘Electricity 2026’, 6 February 2026. Return to text