China's Oil Demand Plunges as Electric Cars Gain Ground

The International Energy Agency (IEA) has reported that electric vehicles in China have displaced an estimated 1.5 million barrels of oil per day, nearly doubling expectations, during the second quarter of this year.

This growth is attributed to the increasing adoption of electric cars and plug-in hybrids, which are using less gasoline as a result.

The IEA notes that China's oil demand is expected to fall by 4 percent, or 280,000 barrels per day, from 2025 to 2027 due to the structural decline in demand for gasoline and diesel.

This decline is being accelerated by the ongoing war against Iran, which has disrupted oil supply routes through the Strait of Hormuz. The IEA projects that much of the lost ground will not be recovered, citing the experience of the Covid-19 pandemic as an example of how large crisis-driven shifts can have persistent impacts on oil demand.