The electric vehicle (EV) revolution is reshaping the global oil market, with analysts predicting a significant slowdown in the growth of transportation fuel consumption. This trend, driven by the rapid adoption of EVs in major markets like China and the United States, is expected to have profound implications for the future of oil demand.
According to analysts at Wood Mackenzie, the growth in oil consumption is expected to be just 340,000 barrels per day (bpd) in 2024, down from 700,000 bpd in the previous year. This sharp decline in the growth rate is attributed to the increasing sales of EVs, particularly in China and the US.
Wood Mackenzie analysts noted, “For this year, Chinese demand will grow by only 10,000 barrels per day (bpd), due to higher EV uptake.” China, which has been a key driver of transportation fuel demand growth in recent years, is now approaching peak oil demand as EVs gain popularity.
The International Energy Agency (IEA) predicts that 45% of vehicles sold in China this year will be electric, while Europe is expected to reach a 25% threshold and the US 11% penetration with electric cars.
This shift towards EVs represents a significant postponement of gas-powered vehicle purchases, leading to a corresponding drop in gasoline demand. In the United States, the world’s largest consumer of transportation fuel, demand reached a record 392 million gallons per day in 2018. However, this figure has been steadily declining, reaching 376 million gallons per day in 2023, a trend expected to continue as EV sales increase.
The proliferation of Tesla vehicles has been a key factor in the US reaching peak oil demand, signaling a broader shift towards electrification in the automotive sector.
