The Daily Telegraph’s world economy editor recently voiced an interesting opinion. According to him, the Saudi and OPEC officials’ claim that world oil demand will keep growing for a long time, disregarding the invention of electric vehicles and the Paris Accord, is not credible.
In October last year, OPEC had to cut its output to keep oil prices stable. It had to cut again in April and then in June, the Saudis took a further step by unilaterally cutting one million barrels a day. Consequently, the OPEC-Russia cartel had to take 2 million barrels a day of production off the table, while the US economy was going strong with a fiscal expansion similar to that of Roosevelt’s world war budget.
This reduction is pretty much the same amount of crude which is being displaced by EV sales worldwide, according to Bloomberg New Energy Finance.
At the 24th World Petroleum Congress in Calgary, the officials maintained their defiant and plucky attitude. However, they chose to ignore the fact that electric vehicles are on track to reach 60% of total car sales in the world’s biggest car market in two years. Moreover, petrol and diesel cars are becoming more efficient, gradually displacing 1.4 billion vintage models, which could reduce global oil demand by one tenth by 2040, according to BP. Furthermore, EV sales in China have already reached 38%, and the country’s Chebai think tank estimates that this figure could hit 17 million, or 60%, by 2025 and 90% by 2030.
The IEA believes that global oil demand will peak at 105.5 million barrels a day in 2028 and then flatten before going into decline. The Rocky Mountain Institute, on the other hand, estimates in its “End of the ICE Age” report that half of global car sales could be EVs by 2026, with the percentage rising to 86% by the end of the decade.
The Daily Telegraph article concludes by highlighting the “breathtaking pace of global electrification” and the possible death spiral of OPEC, as the decline of oil in car and bus transport may be closer than almost anyone had imagined.
