The rapid growth in electric vehicle (EV) sales is contributing to a phenomenon known as "demand destruction" in the oil market. As EVs gain popularity due to their efficiency and environmental benefits, oil demand has started to decline. The International Energy Agency (IEA) has downgraded its forecast for global oil demand growth for 2024, lowering it by about 150,000 barrels per day compared to earlier predictions.
This shift is driven by several factors, including the increasing adoption of EVs, which is expected to displace millions of barrels of oil consumption in the coming years. For instance, by 2030, EVs could reduce global oil demand by as much as five million barrels per day. While the short-term demand for oil spiked earlier this year due to economic reopenings, the long-term trend points toward a reduction, especially as governments and industries adopt stricter efficiency standards and green energy policies.
The decline in oil demand has already started affecting oil prices, which have seen volatility despite production cuts by major oil producers like Saudi Arabia. As EVs continue to dominate new car sales, the oil market will likely face more pressure, potentially leading to more price fluctuations and a rethinking of oil-dependent strategies by key players like Russia and Saudi Arabia.
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This shift is driven by several factors, including the increasing adoption of EVs, which is expected to displace millions of barrels of oil consumption in the coming years. For instance, by 2030, EVs could reduce global oil demand by as much as five million barrels per day. While the short-term demand for oil spiked earlier this year due to economic reopenings, the long-term trend points toward a reduction, especially as governments and industries adopt stricter efficiency standards and green energy policies.
The decline in oil demand has already started affecting oil prices, which have seen volatility despite production cuts by major oil producers like Saudi Arabia. As EVs continue to dominate new car sales, the oil market will likely face more pressure, potentially leading to more price fluctuations and a rethinking of oil-dependent strategies by key players like Russia and Saudi Arabia.
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