For decades, oil was the backbone of global transport. It powered nearly every vehicle, pushing oil demand ever higher. Infrastructure significantly grew around extraction, refining, and distribution. But with mounting concerns over emissions and climate change, the search for cleaner alternatives gained momentum. Electric vehicles (EVs) have emerged as a game changer in this shift.
IEA recently published its Global EV Outlook 2025, where it has predicted,
- By 2030, EVs are set to replace more than 5 million barrels of oil per day (mb/d) globally, with China’s expanding EV fleet making up half of that impact.
Let’s deep dive into this report and understand how the rise of EVs is impacting global oil demand.
The Rise of EVs and Its Impact on Global Oil Demand
By the end of 2024, the global electric car fleet reached nearly 58 million, more than triple the number in 2021. These EVs now make up about 4% of the global passenger car fleet.
The trend is strongest in China, where roughly 1 in 10 cars is electric. In Europe, the ratio is 1 in 20, but growing fast.
The UK, the second-largest car market in Europe, saw EVs take nearly 30% of new car sales in 2024. This rise was driven by the new Vehicle Emissions Trading Scheme, which required 22% of new car registrations to be battery electric or hydrogen fuel cell models.
With flexible credit borrowing allowed, manufacturers achieved nearly 20% EV sales. Norway led with near-total electrification. 88% of new cars sold were fully electric, and another 3% were plug-in hybrids.
As a result, Norway’s oil demand from the road fell 12% from 2021 to 2024. Denmark also saw a big jump, with EVs reaching 56% of new car sales in 2024 and nearly 100,000 units sold.
Meanwhile, Denmark is also seeing strong progress. In the latest figures, the share of electric cars jumped by 10 percentage points, reaching 56%, with nearly 100,000 EVs sold.
Oil Demand Drops as EV Fleet Grows Rapidly
Surge in EVs on roads came heavy on the oil industry. IEA says that electric vehicles slashed oil demand by over 1.3 million barrels per day (mb/d) in 2024.
It was a steep 30% jump from 2023, and the present figures are nearly equal to all the oil Japan currently uses for transportation.
Passenger cars and small vans classified as light-duty vehicles (LDVs) drive most of this shift. Today, they account for 80% of the oil displaced by EVs. By 2030, their share will slightly drop to 77% as electric trucks and buses gain traction.
This is because of the rapidly evolving batteries and stronger charging infrastructure, these heavy-duty vehicles will likely displace nearly 1 mb/d of oil within the decade.
EVs Cut Costs and Boost Energy Security
IEA analysts highlighted that even if global oil prices fall to $40 per barrel, EVs remain cost-effective especially with home charging. This way drivers can continue saving money by switching to electric vehicles.
In China, fast public charging costs about twice as much as charging at home. Yet, EVs still offer better fuel savings than gas-powered cars. As more people choose EVs, countries reduce their oil use and become less vulnerable to price shocks. This shift not only saves money but also strengthens national energy security.
Strong Policies Keep EV Adoption on Track
Although trade tensions, slow economic growth, and oil price drops may hurt overall car sales, these issues affect the market size more than the EV share. In China, steady government support and affordable EV prices continue to drive sales forward.
Meanwhile, in Europe, even though EVs cost more than traditional cars, long-term policies and past crisis responses help keep the market moving.
Additionally, Norway planned to raise taxes on traditional internal combustion engine (ICE) cars and plug-in hybrids (PHEVs) from April. This was meant to boost EV sales and help the country reach its goal of 100% zero-emission car sales by the end of 2025.
The 2025 EV outlook shows strong momentum. Despite economic uncertainty, EVs continue to grow thanks to smart policies, lower battery costs, and better infrastructure. As countries push for cleaner transportation, EVs are helping the world move toward a more sustainable, low-carbon future.
With over 58 million electric cars already on the road by the end of 2024—and more to come—the transition is well underway. This shift not only transforms the oil market but also puts the world on a clearer, more energy-secure path forward.
Global Oil Demand: What the Forecasts Say
We found the latest oil demand forecast in the International Energy Forum’s monthly comparative analysis of the oil market report. It highlights the following:
OPEC
OPEC expects oil demand to grow by around 1.3 million barrels per day (mb/d) in both 2025 and 2026. Almost all this growth will come from non-OECD countries, where demand is expected to rise by 1.2 mb/d each year. In contrast, OECD countries will see only a small increase of 0.1 mb/d annually.
EIA
The US Energy Information Administration (EIA) recently increased its 2025 forecast by 0.1 mb/d compared to last month. It now expects demand to rise by 1.0 mb/d next year. However, this is 0.4 mb/d lower than the estimate made in January 2025. For 2026, the EIA sees demand rising more slowly, by 0.9 mb/d.
IEA
The IEA has a more cautious view. It expects global oil demand to grow by 0.7 mb/d in 2025, even though OECD demand may fall by about 120,000 barrels per day. For 2026, the IEA sees demand increasing by 0.8 mb/d. According to its latest data, average yearly demand growth between 2022 and 2024 was just 0.3 mb/d.
To simplify it, the gap between the highest and lowest global oil demand forecasts is 0.6 mb/d for 2025 and 0.5 mb/d for 2026. These differences highlight the uncertainty that still surrounds future oil demand.
Furthermore, as electric vehicles gain popularity, governments are starting to feel the financial impact. Fuel taxes, which have been a key source of public funding for roads and transport, are shrinking. In 2022 alone, the global shift to EVs resulted in an estimated $9 billion drop in fuel tax revenues.
