Global oil demand is slowing as electric vehicles gain ground and China nears peak oil consumption. Is this the beginning of the end for gasoline?
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Despite calls to “drill, baby, drill,” electric vehicles continue to erode global gasoline demand, while China’s stalling crude consumption is amplifying the trend. Together, these factors are delivering a double blow to the energy demand-supply equation.
Not long ago, EVs were at the forefront of an “incoming” energy revolution. But political dynamics shifted, pushing the energy transition into the background. On his first day in office, Donald Trump announced the U.S. withdrawal from the Paris climate accord, signalling a renewed focus on fossil fuels.
Meanwhile, the Paris-based International Energy Agency, the influential energy watchdog for industrialized nations, has been under the spotlight in recent months for highlighting “the beginning of the end of the fossil fuel era.” The IEA has been on the firing line for advocating that there was no need to bring new oil and gas projects online.
 The boom in EVs and China’s slowdown spell trouble for global oil consumption. |
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Under political pressure, the IEA backtracked last Monday, acknowledging that continued investment in oil and gas fields is (still) necessary to maintain global energy security. The comment puts the energy watchdog of industrialized nations more in line with President Trump’s pro-drilling agenda.
Yet, this does not mean the transition to a less fossil fuel-dependent world has stalled. In fact, oil industry leaders themselves are sounding the alarm on production limits.
At Houston’s CERAWeek energy conference, one of the world’s premier energy summits, oil industry leaders warned of looming production constraints. The event, held from March 10 to 14, featured key players in the global energy sector. Among them was Vicki Hollub, chief executive of Occidental Petroleum, who projected a U.S. production peak between 2027 and 2030. Continental Resources founder Harold Hamm, one of President Trump’s ardent supporters, also chimed in, warning that U.S. oil production is starting to plateau.
Globally, drilling efforts depend on demand, but as demand weakens, oil majors are becoming more reluctant to invest. Strong oil prices are the key incentive for drilling, and firm markets require either rising demand or constrained supply. With global demand increasingly in question, industry leaders are growing apprehensive. The U.S. and China have possibly hit their peaks in gasoline consumption, and EV sales—despite a slowdown in recent months—have played a key role in this transformation.
Growing sales of electric vehicles work against strong oil markets, underlines Kit Norton in his Investor’s Business Daily write-up. Enverus energy transition analyst Carson Kearl says the growing number of EVs impacts demand growth more than the existing demand. “You’re not getting any of the growth you would get if you didn’t have EVs.”
For decades, rising oil consumption was a given, fuelling economic growth and investment. But with gasoline demand in key markets stagnating, that assumption is being challenged. Overall, U.S. sales of passenger cars and light trucks topped out in 2016. The U.S. gasoline demand has remained well below its peak, attained more than five years ago. In China—a country that drove global oil demand for decades—diesel consumption hit its highest level in 2023. Yet many, including China’s largest oil company, forecast the country’s overall oil demand to peak by 2027, Norton points out.
The surge in Chinese oil demand is ending due to the country’s aggressive push for EV adoption. Government incentives have accelerated the shift, steadily whittling away the need for gasoline and diesel.
Kearl says EV and hybrid adoption in the U.S. and China point to a global plateau in oil demand, particularly gasoline and diesel. China’s consumption of gasoline hit a high in 2021, the International Energy Agency reports. Most others also agree that the country’s gasoline consumption of 3.8 million barrels per day in 2021 was the peak.
Kearl expects global gasoline demand to peak between 2026 and 2028, remaining relatively flat at around 20.5 million barrels per day. He sees a drop to 18 million barrels per day by 2034. Most of this will be driven by China and, to a lesser extent, the U.S., Enverus estimated.
CFRA Research sees crude oil demand in China as having “hit a wall in 2024,” growing a mere 200,000 barrels per day. The research firm forecasts the same growth in 2025. China’s oil demand rose by 500,000 barrels per day in 2017, another 500,000 in 2018, and 700,000 in 2019.
China’s largest oil company, China Petroleum & Chemical Corp., or Sinopec, forecast last December that the country’s oil consumption would peak by 2027.
Meanwhile, the IEA forecast says that despite the strong growth projected in China’s petrochemical industry, its oil demand will peak by 2030. It sees China’s oil consumption falling from 16 million to 17 million barrels per day to about 12 million barrels per day by 2050.
The news from the U.S. is no more encouraging. Enverus forecasts that U.S. gasoline demand, currently holding below its 2019 high of around 9.5 million barrels per day, will drop to 8.5 million barrels per day by 2030.
Even with the return of Trump-style energy policies, the oil industry faces an inescapable reality: the global shift away from gasoline and diesel is well underway.
Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.
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Laugh, the demise of oil and gas has been heralded since the 70’s.