Oil use could peak in 2030s – if EVs boom

If electric vehicles (EVs) boom beyond current expectations, global oil demand could peak and flatten out as early as the late 2030s, says OPEC.

In its annual World Oil Outlook, the Organisation of Petroleum Exporting Countries proposes a scenario in which a quarter of the world's cars have batteries. In that case, global oil demand would reach a level of about 109 million barrels per day, during the second half of the 2030s. 

Optimal scenario

But that is an optimal scenario for electric mobility, OPEC says. If the EV fleet expands at half the pace, oil consumption will continue to increase for decades more beyond 2030. But, as Bloomberg notes, the fact that the oil-producing organisation is now including this  faster-growth scenario shows that they are taking the threat of EV growth more seriously. 

The World Oil Outlook report states that “it is highly unlikely that electric vehicles will penetrate the passenger car segment with this strength in less than 24 years. Nevertheless, several countries have publicly stated their intention to achieve an even higher share of electric vehicles in new sales”.

Scale of threat

Norway, France, the UK and China have all announced plans to ban the sale of combustion-engine vehicles in the coming decades. This has concentrated the minds of the oil producers, who are now paying more and more attention to the impact of automotive electrification on their business. 

But opinion on the scale of the 'threat' (from the point of view of the oil producers at least) remains divided. By 2040, no more than 8% of the global light vehicle fleet will run on batteries, says the International Energy Agency. Meanwhile, Bloomberg's own New Vehicle Finance forecasts put that figure at around a third of the total. 

7% drop

But there's yet another threat to oil revenues, points out the OPEC report: the mass adoption of car-sharing, which would lead to a drastic reduction of private car ownership, and potentially thus also to a fall in total mileage. 

According to the report, rapid growth of carsharing in China could lead to a peak in oil demand as early as 2035, after which it would gradually fall over the next five years. Widespread adoption of carsharing and ridehailing in North America would accelerate the drop in oil demand to 7% by 2040, at which point it would be no higher than 6.3 million barrels a day.