[[{“value”:”
- Despite record-breaking EV sales in China and Norway, global oil demand remains strong.
- While China’s EV market surges, its oil demand continues to grow modestly, but India is emerging as the primary driver of global oil demand.
- Oil remains indispensable even for EV production and other sectors.
In the new hit TV show “Landman”, the lead character, Tommy Norris, delivers a five-minute speech that summarizes just how critical for modern civilization crude oil is. Everything, up to and including wind turbines, depends on oil. This year, with record EV sales in China and the continued buildout of wind and solar in Europe, has proven just how pertinent that speech is to the current state of the energy transition—or the absence of it.
About a month ago, the World Bank predicted in a blog post that crude oil demand would hit 103 million barrels daily in 2024. What the World Bank noted was that this number represented slowing demand. What the W?rld Bank did not mention was that the number also represented another all-time high for oil demand.
In its latest monthly oil market report, the International Energy Agency, another doomsayer for oil demand, said demand was about to actually pick up in 2025, rising from this year’s estimated 840,000 barrels daily to 1.1 million barrels daily. The IEA attributed the pick-up to the increase in demand for petrochemical products that would offset lost demand from the transport sector.
Yet even demand from the transport sector is not shrinking anywhere near the rate that was predicted. China has cemented its place as the world’s number-one market for electric vehicles. These constitute increasingly large portions of total car sales. July 2024 was the first month ever in which so-called new energy vehicle sales exceeded ICE car sales. Since July, China has consistently marked months of EV sales, holding more than 50% of new car sales.
n November 2024 alone, the Chinese market once again beat its previous record set in October by over 50,000 vehicles to reach almost 1.3 million EVs sold, EV research house Rho Motion said earlier this month. And yet, crude oil demand in this biggest of all EV markets in the world is still on the rise. Sure, it has weakened from post-lockdown levels, but it is still on an upward trajectory.
There is an even better example of the resilience of oil demand in the face of presumable challengers in the form of electric vehicles. Norway is the country with the highest per-capita EV ownership rates. Norway’s oil demand has not declined as a result of this.
Last year, 82.4% of all new passenger cars sold in Norway were fully electric, up from 79.3% in 2022, according to the Norwegian Public Roads Administration and the Norwegian Road Federation. This share has jumped to over 90% this year, but the impact on Norway’s oil demand “has been negligible,” bank UBS said earlier in the year.
UBS suggested that Norwegians probably keep two cars, one of which should be an EV for shorter journeys and an ICE vehicle for longer-haul trips by way of an explanation of the resilience in oil demand. Rystad Energy came to the same conclusion, noting in a 2023 report that Norway’s oil demand from the transport sector has failed to experience any EV-wrought devastation.
Even so, there are still forecasts that EVs are going to destroy oil demand, specifically in China, the country that every oil trader these days looks at for signs of where oil demand is going to go. Just this week, four forecasters told the Financial Times that China was going to see over 50% of EVs in its total car sales in 2025. In a way, this is not exactly breaking news, after this year saw several months of EV sales representing more than 50%. However, these four also said that ICE car sales were going to drop by a tenth next year, which is an interesting prediction in light of this year’s figures. These have shown increases in both EV sales and ICE car sales to the tune of 14.4% this year.
There is also the oil demand shift factor. For years, everyone has been focusing on China. Yet now China’s oil demand is slacking off, although it would be premature to call its peak, and another Asian powerhouse is about to pick up the title of biggest demand driver. That powerhouse is India, and this year, India is seen consuming 220,000 bpd more oil than it did last year, versus 90,000 bpd for China.
This is according to the U.S. Energy Information Administration, which also said in its latest Short-Term Energy Outlook that in 2025, Indian oil demand was set to grow by 330,000 bpd. China will see a higher growth rate next year compared to this year’s weaker-than-expected increase, the EIA also predicted. Yet, at 250,000 bpd growth in 2025, China will still lag India’s consumption increase. It is worth noting that China’s demand growth is seen picking up despite the bullish EV sales predictions from other forecasters.
The reality of oil demand is that it underpins everything, including EV manufacturing, given the multitude of petroleum derivatives that EVs feature. One could go as far as to say there could be no energy transition without the very hydrocarbons that transition advocates want to do away with and that would be a statement of fact. This is why oil demand growth may moderate in the coming years but it would be a while yet before it starts declining.
By Irina Slav for Oilprice.com
The post Oil Demand Stays Strong Despite EV Surge appeared first on Energy News Beat.
“}]]